Research On The Impact Of Monetary Policy On Technological Innovation

China is in the period of transforming economic driving force,optimizing economic structure,transforming the mode of economic development and changing the international situation.In order to actively deal with the downward pressure on China’s economy under the complex and severe situation at home and abroad,the Chinese government has put forward an important argument that innovation is the first power to lead development and the strategic support for the construction of a modern economic system,and has put technological innovation at the core of overall development.This is because the existing economic theory and practice have shown that technological innovation is the core driving force of long-term economic growth.The innovative behavior of economic agents depends on the input of monetary funds(Brown & Petersen,2011).Under China’s banking-dominated financial system,the main source of the innovative agents’ access to monetary funds comes from bank credit,which shows that,the operation mode of the central bank’s monetary policy and the use of policy tools are the important factors that affect the innovation activities of economic subjects.Since the beginning of the new normal,in order to maintain reasonably ample market liquidity,give full play to the dual regulatory functions of the aggregate and structure of monetary policy instruments,and increase policy support for key areas and weak links such as scientific and technological innovation,within the framework of traditional monetary policy,the central bank has enriched the toolbox and formed a combination of quantitative,price-based and structural policy tools to support technological innovation and real economic development,and achieved remarkable results.Since the Trump administration took office,the US government has identified China as a strategic competitor and frequently adjusted its China policy in an attempt to curb China’s technological progress and real economic development,the technology competition between China and the United States has entered a heated and normal stage,and the core of the great power competition is finally embodied in the technology competition.However,China still has a long way to go to improve its innovation capability,and key technologies in some fields are still under the control of others,resulting in a series of "choke points" in the development of related industries,this is not only a threat to the security of the industrial chain,not conducive to the formation of the new pattern of domestic and international double-cycle development and the implementation of high-quality development strategy,but also related to China’s future national fate.Therefore,based on the combination of various monetary policy tools of the central bank and China’s innovation-driven economic development,this paper studies the impact of monetary policy on technological innovation,and further explore the impact of the underlying transmission mechanism is the government departments and academia to solve the problem.In view of this,on the basis of theoretical research on the mechanism of the impact of monetary policy on technological innovation,firstly,based on the macro-and industry-level data,this paper empirically studies the non-linear common and idiosyncratic conduction effects of multi-monetary policy tool combination operation of central bank on technological innovation.Furthermore,based on the characteristics of two-way dynamic spillover effect of monetary policy in China and the United States,this paper studies the dynamic spillover effect and transmission channel of monetary policy in China and the United States on technological innovation from the perspective of open economy.In terms of monetary policy on the impact of technology innovation mechanism,this chapter builds a based on the R&D investment of the two countries schumpeter quality ladder model,in this model the CIA constraints imposed by consumption and R&D investment,to reveal the economic balanced growth path quantitative type and price-based monetary policy tools of the transmission mechanism of technology innovation.The results show that: First,the increase of interest rate of price-based monetary policy instrument will lead to the increase of R&D investment cost and financing constraint degree of enterprises.,moreover,the nominal interest rate rise increased relative to the leisure consumption costs,member of the family leisure increases,labor supply will reduce,it also reduced the development of labor supply,thus inhibiting technology innovation;Second,The increase of money supply by the Central bank will promote the technological innovation of enterprises.The increase of money supply means the increase of loanable funds of banks and the decrease of financing costs of enterprises.Under the stimulus of loose monetary policy,the degree of financing constraints faced by enterprises also decreases,thus promoting the technological innovation of enterprises.In terms of macro level,since the new Normal,the combination operation of multiple monetary policy tools of the People’s Bank of China and the effectiveness of monetary policy will produce nonlinear characteristics as the external economic environment changes,this chapter extends Bernanke et al.(2005)’s single monetary policy instrument(interest rate)to a combination of monetary policy instruments,the nonlinear adjustment effect of the combination of multi-monetary tools on technological innovation is empirically studied by constructing the FAVAR model with time-varying parameters(TVP-FAVAR)of monetary portfolio.The results show that: First,the common factors of price-type and quantity-type monetary policy can be found in the combination of multiple monetary policy instruments,and the two driving forces have a significant impact on technological innovation,the common factor of price-type monetary policy will restrain technological innovation,while the common factor of quantity-type monetary policy will cause the positive and negative response of technological innovation;Second,different types of monetary policy instruments have different effects on technological innovation.As for the traditional quantitative monetary policy tools,the increase of M1 and M2 by the central bank will mainly promote the technological innovation,while the increase of M0 will restrain the technological innovation through the "Inflation tax" mechanism,the effect of M0 on technical innovation is more remarkable.As for the traditional price-based monetary policy tools,the central bank’s raising the benchmark lending rate mainly restrains the technological innovation,and the market-oriented interbank offered rate has a better effect on the technological innovation.As far as structural monetary policy is concerned,the central bank’s increase in the supply of standing loan facility(SLF),medium-term loan facility(MLF)and collateral supplementary loan(PSL)mainly promotes technological innovation,and the increase of MLF interest rate mainly restrains technological innovation,among them,MLF has obvious moderating effect on technological innovation.Third,in different economic periods,the adjustment effect of monetary policy on technological innovation is nonlinear.During the period of steady economic growth,the transmission effect of monetary policy on technological innovation is weak,and during the period of financial crisis and adjustment,loose monetary policy will ease the adverse effect of financing constraints on enterprise R & D,this promotes technological innovation;during periods of high economic growth,loose monetary policy suppresses technological innovation through "Inflation tax" and "financial asset prices".In terms of industry level,aimed at the asymmetry of the monetary policy conduction effect of industry characteristics,this chapter in the theoretical research on the impact of monetary policy on industry technology innovation,based on the Chinese A-share listed companies in Shanghai and Shenzhen as the research sample,according to the intensity factors of the sample companies into labor,capital and technology intensive industries,Based on the Panel-FAVAR model,this chapter studies the common transmission and characteristic transmission effects of the combination of multiple monetary policy tools of the Central bank on industrial technological innovation from a linear perspective,and divides the sample interval into two periods: financial crisis and adjustment period and new normal period.From a nonlinear perspective,this chapter studies the common transmission and idiosyncrasies transmission effects of multiple monetary policy instruments in different economic periods on industrial technological innovation.The results show that: First,combination of multiple monetary policy tools operation will produce an unobservable common factors of price-based and quantitative monetary policy,the two common driving forces have a significant impact on technological innovation in different industries.The common factors of quantitative monetary policies can promote technological innovation in labor,capital and technology-intensive industries.The common factors of price monetary policy inhibit the technological innovation of labor,capital and technology-intensive industries,but the degree of impact is asymmetrical.Second,There are significant differences in the idiosyncratic transmission effects of different types of monetary policy tools on industrial technological innovation.For quantitative monetary policy tools,money supply M2 has the greatest impact on industrial technological innovation.For the price monetary policy tool,the highly marketized 7-day inter-bank lending rate has a great impact on industrial technological innovation.The moderating effect of structural monetary policy on industrial technological innovation shows significant structural characteristics.PSL has a greater impact on capital-intensive industries,MLF has a more significant impact on labor-intensive industries,and SLF has a better promotion effect on technology-intensive industries.Third,In terms of economic stages,the impact of monetary policy on industrial technological innovation is pro-cyclical.Compared with the new normal period,monetary policy in the financial crisis and adjustment period has a greater impact on industrial technological innovation.In terms of the two-way spillover effect of Chinese and American monetary policy on technological innovation,this thesis firstly expands the analytical framework of Mundell-Flemming-Dornbush model,and theoretically studies the spillover mechanism and channel of monetary policy on technological innovation.Based on the conclusion of the theoretical research,this chapter empiricized the dynamic spillover effects and transmission channels of the quantitative and price-based monetary policies in China and US on the technological innovation of the two countries by using TVP-FAVAR model.Study found: First,Although the Fed’s monetary policy on China’s technology innovation dynamic spillover effect significantly,but China’s monetary policy is also significant spillover effects on US technology innovation,which means that China is no longer the Fed’s monetary policy spillover effects of unidirectional recipients,monetary policy of China and the US for technology innovation exists two-way spillover effect between the two countries.However,the spillover degree of The Fed’s monetary policy to China’s technological innovation is greater,which means that the two-way spillover effect of the US and China’s monetary policy on technological innovation is asymmetric.Second,By comparing the spillover degree of quantitative and price-based monetary policy tools,we find that the quantitative monetary policy of the Fed’s has a higher degree of technological innovation in China than the price-based monetary policy,which may be related to the unique position of the dollar in the international payment system.The spillover of China’s quantitative monetary policy tools to US technological innovation is slightly stronger than that of the price-based type,which means that there is an "obstruction" in the transmission channel of China’s price-based type monetary policy,which may be related to the low proportion of RMB in international payments and the low degree of internationalization.Third,The spillover effects of Chinese and US monetary policies on technological innovation in both countries are time-varying.Among them,in the new normal period of global economy,the monetary policy of the Fed’s has a greater spillover effect on China’s technological innovation.During the global financial crisis and European debt crisis,China’s monetary policy had a greater impact on US technological innovation.Forth,By examining the spillover channels of Chinese and the Fed’s monetary policies on technological innovation,we find that the Quantitative monetary policy of the Fed’s mainly affects China’s technological innovation through capital flow and interest rate channels.The Price-based monetary policy of the Fed’s mainly affects China’s technological innovation through trade and capital flow channels,while the transmission effect of exchange rate channel is weak.China’s quantitative and price-based monetary policies mainly affect US technological innovation through trade and capital flow channels,while the transmission effect of interest rate channel and exchange rate channel is weak.According to the above conclusions,this thesis respectively from the monetary authorities and enterprises to promote China’s technological innovation capacity of the relevant countermeasures and recommendations.As far as the monetary authorities are concerned,when formulating policies,they should take the new development concept as the guidance,dilute the economic growth target,take technological innovation into account,and create a new type of monetary policy tool,we will effectively bring into play the targeted regulatory role of structural monetary policy instruments in technological innovation;promote market-oriented reform of interest rates and improve the formation and transmission mechanisms of market-oriented interest rates;and flexibly apply a variety of monetary policy instruments,we should pay more attention to the changes of US monetary policy and strengthen the international coordination of monetary policy.For Enterprises,they should pay close attention to the change of monetary policy when they invest in R&D,and different industries should pay attention to the effect of monetary policy.Technology-intensive enterprises should make full use of the favorable influence of loose monetary policy on themselves,take advantage of their technology accumulation and access to limited resources,and invest more funds in R & D activities.