Empirical Study On Asymmetric Regional Effects Of Monetary Policy In China

If implement the single monetary policy in a country where there is a great discrepancy in regional economic development, the great different effects of the policy in various regions are inevitable, which is the regional effects of monetary policy. For a long time, we implemented the single monetary policy and partly ignored the imbalance of regional economic development which called for different monetary policies, which results in the asymmetric regional effects of monetary policy in China.In this paper, after the review of the theory of asymmetric regional effects of monetary policy, firstly, we use the Mundell optimal currency area criterion to test whether China is an optimal currency area or not, and the result is that China is not an optimal currency area yet, which determine the existence of asymmetric regional effects of monetary policy in our country. Then, based on the co-integration test, impulse response and variance decomposition of the VAR Model and Kalman Filter of the State Space Model, we select money supply as the direct variable of monetary policy and analyze the regional effects of monetary policy in China. The result of empirical study shows that:①There exist manifest asymmetric regional effects of monetary policy in China.The monetary policy's impacts on the economic growth in the eastern region is the strongest, followed by the central region, the western region is the weakest.②The economic growth of the eastern region responses to money supply fastest and has the highest sensitive, followed by the central region, the western region is the weakest; In the western region, the explanation of money supply to economic growth is far lower than the eastern and central region, and the impact was obvious lag.③The marginal contribution rate of monetary policy to the economic growth in the eastern region is the highest, followed by the central region, the western region is the lowest.④The asymmetric regional effects of monetary policy in our country is mainly due to the imbalance of economic development, financial institutions and financial market development, the difference of credit resources and degree of financial deepening, the discrepancy of behavior of businesses and residents, and the inconsistency of efficiency of investment and level of output in east, central and western regions of China. So there exist manifest regional discrepancy in the main transmission channel of monetary policy(the credit transmission channel),including the sections of intermediary, carrier,micro- economic main body and target, which results in the inevitable asymmetric regional effects of monetary policy in China.⑤The policy suggestions which can improve the regional effectiveness of monetary policy and narrow down the regional difference include promoting the coordinated development of regional financial and economics, implementing a flexible monetary control policy on the premise of the unity of monetary policy, and executing certain different financial regulatory policy.