Study On The Effect Of Unified Monetary Policy Based On Provincial Data

At present, China has implemented unified monetary policy. But the economic development of various provinces in China is different: the economic development of eastern part is more advanced but in central and western regions is relatively slow. So this is a pair of contradictions, which between the differences of economic growth and unified monetary policy. The central bank has carried out moderately tight monetary policy due to rapid increase growth of eastern economy, but the central and western regions have to slow-down their speed because of the tight monetary policy. More and more researchers have approved to implement different monetary policy.First of all, this paper discusses the differences among the economic development of each province, and expounds that unified monetary policy and the theory of optimum currency areas don't fit china by analyzing the condition of implementing unified monetary policy. But implementing discrepant monetary policy suits china. This also explains our country can implement different monetary policy, and it can promote China's balanced development of provincial economy to implement different monetary policy. Next, the paper draws the conclusion that FDI and fixed assets investment have the largest impact on provincial economy by establishing SVAR model, and that the impact on industrial structure of FDI and fixed assets investment by establishing VAR model. Then the paper gives its policy recommendations to implement different monetary policy. The implementing agency exists by the method of entitling regional banks of the People's Bank of China the right of adjusting monetary policy. And the monetary policy instruments exist by the way of implementing monetary policy with monetary policy instruments. Then our central bank can implement different monetary policy. Regional banks of the People's Bank of China can adjust monetary policy according to the economic growth of local areas ensuring consistent with the central bank's monetary policy to assure provincial economic development in a balanced and smooth way.