| Transmission mechanism of monetary policy describes how policy affect real economy and the path on which it depends (transmission channel) . It is the base of effectiveness of monetary policy. Every monetary policy with different target can find a mechanism combination including a series of transmission channels to serve it. In theory, the transmission of monetary policy may bring into effect by interest rate mechanism, asset price mechanism, credit mechanism and foreign exchange mechanism. As the development of economy and finance, the role of vary of mechanism in the transmission of monetary policy changes. So, in the course of economy marketization and finance deepening, we should pay attention to whether transmission mechanism of monetary policy changes.Based on the analysis of the theories of monetary policy transmission channel, we introduce the characteristics and functions of China monetary policy transmission mechanism. Then we use ADF test,PP test, VAR model and variance decomposition to carry out the analysis of monetary policy transmission channel and the efficiency of monetary policy with the quarterly economic and financial data. The results show that the impact of credit channel in China is getting smaller; the influence of monetary channel (mainly the interest channel) gets more and more important and exceeds the effect of credit channel during the whole period. Exchange rate channel show little impact. Furthermore, M2 is the main factor for explaining the change of price. At last we raise some suggestions to strengthen the validity of the transmission mechanism of our monetary policy. |
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