Research On Regionally Asymmetric Effects Of Monetary Policy In China

The different regional effect of monetary policy is one of the enduring research topics in monetary policy area. Since reform and opening, Chinese economy has maintained sustained and rapid growth,and the monetary policy has been an important tool in adjusting the economy's trend. However, the Chinese uniform monetary policy has different impacts on different provinces since each province has different natural resourses,economic development level, etc. It is very significant to deeply research Chinese uniform monetary policy's provincial asymmetric effects and determinants because this study can improve operational effectiveness of monetary policy and facilitate the balanced regional development.In theory,the same input of financial monetary policy may cause different outputs in an unbalanced economic body. If a uniform monetary policy is adopted,unbalanced monetary policy effects will be caused and the economic relationship between different regions,however, it may cause serious unbalance in real economic surroundings and lead to conflicts among different regions, the monetary policy should not be simple and unique but be practical. However,our government has ignored the differences among areas and adopted a unique policy. It turns out that this kind of policy does not help the coordinate development of regional economy and steady processing of macro-economy.This thesis investigates Chinese monetary policy's provincial effects by utilizing VAR over the period 1990-2009. firstly, it conducts the empirical analysis of impacts of base money on each probince's M2. Secondly, the impacts of each province's M2 on provincial real variables are empirically studied. Through these above empirical study, this thesis finds that Chinese uniform monetary policy has great asymmetric provincial impacts and finds that these exists the positive correlation relationship between cumulative provincial impulse response,and loan -deposit ratio and provincial real variables. The above result provides the evidence that china exists credit channel of monetary policy. The determinants analysis also indicates that provincial openness is an important factor affecting asymmetric provincial impacts.After systematically studying Chinese monetary asymmetric affects this thesis provides some policy suggestions on monetary policy's regional operation such as perfecting regional financial supervision indices, establishing regional operation model of monetary policy, adjusting the rights of central bank's branches,etc.