An Empirical Study On The Asymmetric Effects Of Monetary Policy In China

The study on the asymmetric effects of monetary policy extends the effectiveness of monetary policy. With the assumption of non-neutrality of monetary policy, tight monetary policy in theory could slow down the growth rate of overheating economy, Expansionary Monetary Policy in theory, could stimulate the economy. But if we carry on the quantitative study on monetary policy, the tight monetary policy and expansionary monetary policy has different effect on the economy. The expansionary monetary policy applied in recession does not perform as well as tight monetary policy applied in overheating phase. Economists call this phenomenon as "Asymmetric Effects of Monetary Policy." The study on "Asymmetric effects of monetary policy" regard not only to the policy direction and intensity, but also to the economic performance and stage of the cycle. The study of this issue is of significant importance.Nowadays, domestic scholars gradually devote more attention to the asymmetric effect of monetary policy applied in recent years, and most of them analyze the causes of asymmetrical with existing overseas theories, but they did not reach the same conclusion because of different empirical measures.Presently, the study of asymmetric effects of monetary policy is mostly from the aspect of main tools of monetary policy, in this paper, the author sets the period from 1998 to 2008 as a sample, embarked from the intermediate target of monetary policy-the amount of three levels of money supply, set them as the result of Monterey policy, set GDP as its effect, combined with asymmetric ARCH model to study the cause to asymmetric effects of monetary policy from the aspect of transmission mechanism and prospection.The results show that there exists a certain degree of asymmetric effects of monetary policy, combined with the practice of monetary policy, the asymmetric effects of monetary policy not only have relations with the intermediate targets, but also with the characteristics of monetary policy tools. At present, China mainly depends on the monetary policy transmission of the credit channel, the central bank's monetary policy indirectly influence business investment through the loans of commercial bank.This transmission mechanism determines that the central bank's effects of tight monetary policy or the implementation of the expansionary will be restrained by the behavior of banks and enterprises. Under the auspices of the credit channel in the various micro-economic agents face different performance of different monetary policy analysis, the paper argues that the role of the central bank's monetary policy depends on the combination of a series of constraints. Specific to the situation in China, the central bank tightening of monetary policy because of commercial banks and enterprises have no other effective financing channels thereby affecting the investment and output. The deflationary monetary policy during the expansionary economic because of the decline in the supply of bank loans and corporate loans caused a drop in demand factors such as a credit to the real economy and put less money, and we can't stimulate the economy.