An Empirical Study On Efficiency Of Transmission Mechanism Of China's Monetary Policy

With the establishment of market economy and development, the principle of Maintain the stability of currencies and promote economic growth has been identified as the ultimate monetary policy goals of China, Money supply is gradually being established as China's monetary policy objective of the intermediary, But the scale of the credit has also played a mediating role.In order to test the intermediate goal of monetary policy to the ultimate goal of the transmission mechanism and actual results, and developed different intermediate goal of adaptability. This paper summarizes theoretical research on the basis of the monetary policy transmission mechanism and analysis of the development of China's monetary policy transmission mechanism and process changes, established the VAR systems composed by the M1, the total amount of loans by financial institutions, industrial value added, the rate of inflation, and finally get the Impulse Response Analysis.The Empirical study tested the respective monetary policy through the currency and credit channels for the validity of conduction channels. The results show below. Firstly, Currency conduction through the channels of monetary policy, price stability in a short period of time with regard to a significant role, but in the long run, effect is not obvious; secondly, it also found that there is a positive correlation between the economic growth and the money supply. This shows that by regulating the money supply, it can stimulate or sustain economic growth trends in a certain extent. In addition, through the credit channel conduction of monetary policy, it can not promoting price stability, and has also not been achieved good results in the promotion of economic growth.Comparing with the two monetary policy transmission channels, we can found that China imposed by the monetary policy to stabilize prices and promote economic growth with a certain effect since 1994. In additions, the currency in China's channels of transmission of monetary policy is more effective, This fully reflects the effect on the central bank's intermediate goal through the money supply.