A Study On Asymmetric Regional Effects Of Monetary Policy In China

Monetary policy is the central means for China to regulate and control macroeconomic at present stage. It plays a significant role in stabilizing prices and promoting economic growth. However, in practice, our monetary policy shows the limitation of paying attention to gross adjusting control, and ignoring the regional differences. The levels of economic development in different regions differ significantly. Therefore, the monetary policy which only pays attention to the total amount produces the asymmetric effects in different areas. The asymmetric regional effect means that a single monetary policy has different influence on real economic in different regions. This kind of asymmetric regional effect will lead to the inconsistent regional business cycles, bring additional risk to macroeconomic, and may even enlarge regional differences. Therefore, we must focus on the asymmetric regional effects of monetary policy. The purpose of this paper is to study the asymmetric regional effects of our monetary policy. Get the form of the asymmetric regional effects of our monetary policy by simulating the reactions of real economic of31provinces to monetary policy respectively by the vector auto-regression (VAR) model and impulse response function (IRF). Demonstrate the reasons of the asymmetric regional effects of monetary policy in terms of transmission mechanisms and transmission carriers and analyze the condition of our country empirically. Finally, give some policy proposal on how to deal with this problem.The three main conclusions of this paper are as follows.①The response speed of all provinces to monetary policy is similar. The asymmetric regional effect is not clear in the short run. The effect of monetary policy in developed province is strong, while weak in less developed province in the long run.②The difference among the enterprise structure and the bank structure in different areas is the main reason for the asymmetric regional effects in China’s monetary policy.③The asymmetric regional effects of monetary policy will exist in a quite long period in our country. It can be avoided by adopting differential regional monetary policy.