Research On The Efficiency Of Transmission Mechanism Of Monetary Policy In China Based On DSGE

The transmission mechanism of monetary policy shows the mechanism of interaction among economic variables during the process that Central Bank applies the tools of monetary policy to affect the final goals in the real economy system through currency market and capital markets.The effectiveness of the transmission process can directly affect the efficiency on of monetary policy.Now,China has been coming to the bottleneck of economic development and the transform of economic structure has been into a crucial period.Therefore,during such crucial period,it would be practical issue for China that how to operate monetary policy to adjust Chinese macro-economy effectively,enhance the efficiency of monetary policies,and keep the transformation of economic structure in a correct direction.The paper simulates the operation of China's economic system by establishing a dynamic stochastic general equilibrium model with China's economic characteristics.And based on the simulation of the entire economic system including financial system and real economy system,this paper analyses the essential links of the transmission of monetary policy,pays attention to performance of monetary policy in these essential links and the interaction of economic variables in the entire economic system,and then find out inefficient links further.After that,according to the reason for these inefficient links,provide suitable solutions and improve the efficiency of the transmission of monetary policy.No matter whether in the interest rate transmission mechanism of the monetary policy,the credit transmission mechanism,or the asset price transmission mechanism,the simulating result shows that there are inefficient links.That is,there is time lag of the response of economic variables to monetary policy,or/and the degree of such response does not reach the expectations.As the first link in the transmission mechanism of monetary policy,China's currency market has the function of pricing short-term interest rates through market behavior and passing pricing results to the capital market,and then affecting the some financial variables through the capital market.The simulating result shows that our currency market can effectively pass short-term interest rates to the capital market.However,the transmission of monetary policy in China's capital market has been hindered which are showed in two points.One is a phenomenon of divergence between quantity and price in the China's credit market.That is,there is a time lag between the adjustment of scale and interest rate of loan.The other is asymmetric change of investment risk and investment return in China's stock market,and a weak correlationship between Tobin's Q and interest rate which indicates stock price is not sensitive to interest rate.In the China's real economy system,due to the problems such as mismatch of supply structure and demand structure and low efficiency of capital utilization in the real economy system,the transmission of monetary policy is hindered.The problems above have seriously affected the efficiency of the transmission mechanism of China's monetary policy.In order to solve these problems,this paper presents some suggestions based on the perspectives of the financial system and the real economy system.The purpose is to truly improve the operational efficiency of China's financial system and the real economy system,and then the efficiency of transmission mechanism of China's monetary policy.