| The monetary policy transmission mechanism is to research how the monetary policy and its instruments affect the real economy through financial variables. Theoretically,it is not only a subject of finance and banking, but also a main subject of monetary economies.Though long ago economists began to research the monetary policy transmission mechanism, and now a lot of progress has been made. However, currently, technology progress, globalization, liberalization and the increasing need of individuals for financial services have facilitated the global financial merger and integration of the international capital markets, and this has brought unpreceding challenges and great uncertainties for the traditional monetary policy transmission mechanism. Hence, the study of this topic is quite changing. The problem of monetary policy transmission is the most complicated and realistic problem in the financial adjustment in China, it is related with macro and micro economic elements and the choice of monetary policy. This problem is of particular concern during low economic growth and deflation in our country. Therefore, the study of this topic is more meaningful now.Therefore, based on the research outcomes of forefathers and the successful experiences of the developed countries, the paper tries to research China's monetary policy transmission mechanism.There have four sections in the paper. The first section is on the theory of the monetary policy transmission mechanism . Classical School was the earliest ones to research the problem, they considered money was only "the veil which covers the activities of economy", hence they thought monetary policy was of no availability. Then, Wicksell proved money was not neutral through his famous theory of "accumulative process of economy". Therefore, the government should use monetary policy to adjust the macro economy.The theory of monetary policy transmission is categorized three kinds in the paper: Interest rate transmission mechanism, Credit transmission mechanism, foreign exchange rate transmission mechanism. The interest rate transmission mechanism includes two channels, one is the pure interest rate transmission channel which is based on IS-LM model, The other one is based on Tobin's q-Theory and the Wealth Effect. The credit transmission mechanism includes bank lending channel and balance-sheet channel. The exchange rate transmission channel is divided three sorts: Mundell-Fleming Model, Dornbusch's Overshooting Model, Moore's External Exchange Rate.The second section is the review on the history and characteristics of China's monetary policy transmission mechanism. Firstly, the development of the transmission mechanism is divided four stages: the stage of heavy pressure on monetary policies, the stage of monetary policies going into effect, the stage of comparative development of monetary policies, the stage of monetary policies shifting to indirect control. During each stage, the transmission mechanism and effect of monetary policies are to some extent different, reflecting the different features of economic and financial structure during each stages. It points out the major characteristics in the transmission of China's monetary policies: the transmission channels for monetary policies has been diversified, but credit still holds a dominant position; monetary credit has been growing at a fast speed for a long time, the velocity of money circulation and time to take effect have been gradually slowing; the transmission of monetary policies has obvious transmission features; the micro basis for the transmission of monetary policies has been clearly improved.The third section is mainly analyzed some flaws in Chinas monetary policy transmission. In money market: The inter-bank market is developing comparatively fast while the note market is developing very slowly; there is little contact between them; the people and the finance instruments are not enough. The system of capital market is imperfect and single, hence its function of financing is weak. Th... |
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