Monetary Policy Transmission Mechanism

Since 1997, the People's Bank of China (PBC) has adopted series of active monetary policy to control deflation, increase investment and consumption in order to make macroeconomy prosperous. Interest has been decreased seven times successively, deposited reserve has also been lowered, and reloan from PBC has been enlarged, etc. However, economy system reacted without excitement fronting these policies. Money supply increased slowly, residential investment and consumption were not increased without continuous power. Is this because China's monetary policy transmission mechanism can't operate well? This is the problem our article deals with.This article includes four chapters. The first one is that money is whether neuter or unneuter. It is the presupposition of monetary policy's analysis.The second chapter is theory of monetary transmission mechanism in the west, we make a detailed introduction on main western theory on monetary policy transmission mechanism. This chapter is a theoretical base of the following research.The third chapter focuses on the efficiency of China's monetary policy. From the angle of quantitative analysis, we research on monetary policy's influence on consumption, investment, net export.The fourth chapter deals with the policy that makes monetary policy transmission mechanism operate well and improves the efficiency of monetary policy.