Study Of Regional Differences In Monetary Policy Transmission

The transmission mechanism of monetary policy is to analyze how the monetary policy and its instruments affect the real economy through various financial variables. The validity of the monetary policy is based on the homogeneity of economy and finance of a region. If the economy and finance is not homogeneous in a region, the effect of the transmission mechanism of monetary policy will invalid.The research about the regional effects of China's monetary policy in transmission period mostly results from the theory of optimum areas of R.A.Mundell. But China is not a real optimum area. If we apply uniform monetary policy, the effects of the monetary policy will different among regions.Based on the former research results, we use theoretical and positive method to analyze the factors affecting the transmission of the monetary policy and find channels to improve the transmission of monetary policy. This paper is continuity of the former research. Main contents and opinions in the paper as follows:1. About the general theories of the transmission mechanism of monetary policy. The paper concludes the analysis frame and general theories of the transmission mechanism of monetary policy, which is the foundation of the research.2. Based on the theories of the transmission mechanism of monetarypolicy, the paper analyzes the different effects of the uniform monetary policy in different regions through regional differences of departments and channels of the transmission mechanism of monetary policy. In the elaboration of regional differences of departments, the paper analyzes the differences about development content of monetary market, financial organizations, the nature and finance of companies, the consumption of residents among different regions. These factors affect the transmission mechanism of monetary policy and economic development in different regions. In the elaboration of differences channels of monetary policy transmission, the paper concludes the main channel of monetary policy transmission is the credit channel which is the main factor affecting the uniform monetary policy in different regions.3. The initial cognitive analysis about different effects of uniform monetary policy in different regions is done with the statistical methods. We use VAR and IRF to analyze the relationship between GDP and credit size in different regions.4. On the ground of the former research, we think some monetary policy should be different in different regions to improve the development of developing regions' economy, thus to promote the coordination among regions.