An Research On Asymmetric Effects Of Monetary Policy Based On Credit Liquidity

In China, monetary policy is one of the most important means of macroeconomiccontrol. Through the development and implementation of monetary policy, the People’sBank of China can achieve its ultimate goal of the national economy. In the process ofimplementation of monetary policy, credit liquidity is an important part, which helps totransfer monetary policy’s signals to the credit markets by credit channel. It will pass thepolicy from the central bank to commercial banks, and then to the real economy. Our studyon China’s monetary policy is based on the liquidity of credit factor, in view of ourmonetary policy’s transmission channels of interest rate and the asset prices are yet to beperfected, while the credit channel performs effectively in the international financial crisisfrom2008.In this paper, we confirmed that credit channel was practicable. In the main part, wefirst reviewed China’s monetary policy operated from2000to June2011. Then we putquarterly data into VAR model during the empirical analysis, in order to explore theperformance of China’s monetary policy. Specifically, we studied the credit channel bytaking the conduction of LOAN (on behalf of the credit variable) to GDP (on behalf of thetotal output variables). Then we tried to find out that whether there was an asymmetriceffect through China’s monetary policy’s implementation, and the specific stage of theasymmetric effect, as well as the performance of the asymmetric effect. The results of theempirical study show that there is an existence of asymmetric effects of China’s monetarypolicy. In general, tight monetary policy works better than the expansionary monetarypolicy. However, expansionary monetary policy can create a greater impact on theeconomy under the special mechanism. Finally, combined with the related theory and specific conditions, the paper concluded the reasons of asymmetric effects of China’smonetary policy from the perspective of credit liquidity. In the end, we drew theconclusions of the paper and made several policy recommendations.