Research On The Effectiveness And The Time Lag Of China's Monetary Policy

Now there are lots of literatures on effectiveness of monetary policy and time lag in China, but most of them are qualitative which are not precise in the whole, even though few of the quantitative analytic literatures used the newest econometric approaches to quantify the effects of monetary policy of China. The author insists that the proposition on EMP & TL contains many preconditions, the reference values of the qualitative papers are limited as they cannot answer exactly what on earth the EMP & TL is .The stress is to attempt to apply the newest econometric approaches to develop the topic on EMP & TL to a new regime and draw some valuable conclusions.Many economists believe that there are all kinds of transmission mechanisms about monetary policy. They generally look on both monetary channel and credit channel as two main transmission mechanisms. But there is controversial on the role of monetary channel and credit channel, The empirical results of this dissertation show that the monetary policy affected the real economy through both the monetary channel and the credit channel, but the latter exerted a more important role in transmitting monetary policy. The low effectiveness of Chinese monetary policy was due to the obstructions of credit channel in recent years. The Chinese monetary authority should expand valid credit supply to raise the effectiveness of monetary policy.Cross relation way and impulse way are both applied in this article to get the time lag. The empirical result shows the time lag is different in the production and consumption field. Additionally, different money supply has different time lag. M₁ and M₂ are almost same. But M₀ is mostly different. Its effectiveness and time lag is stronger than the both above. The time lag is complicated in this period. So we shouldn't treat the problem immutably. On the otherwise, we should look it variably.