Analysis And Study On Conduction Effedt Of Current Monetary Policy In China

Since1998, the People’s Bank of China abandoned loan scale management, resumed open market operation, reformed deposit reserve system and expanded floating space of interest rate, which clearly indicated that the monetary policy operation had being changed from direct into indirect. Along with the deepening reform of China’s economic and financial system, the indirect monetary policy have been gaining lots of development and the space and environment that can make itself effective. But the world’s complex economic and financial environment, the structural factors in China’s system reform and the increasing external dependence, make monetary policy operation more and more complex.From the year of1998, Chinese economy has experienced three stages:the deflation from1998to2002, excess liquidity and high level of CPI since2003, the intensifying influenceof international financial crisis. In order to promote economic growth and depress price fluctuate, the central bank used monetary policy tools more intensively than ever before such as adjusting deposit reserve rate, open market operating or interest rate adjusting. Under the background that the monetary policy tools, target system, operating mode do not have significant changes, whether the monetary transmission mechanism and channel smooth or not will significantly restrict the effect of monetary policy. In this situation, the study of the mechanism, working environment, transmission effect in different transmission channel, will be of strong significance to China’s the practical problems, such as economic and financial reform and monetary policy operation.Firstly, the paper makes a short brief review with the related literature about the monetary policy transmission home and abroad and a detailed analysis of the changing of China monetary policy system, pointing out that the monetary policy has been turning into indirect regulation and the policy tools, target system, operating mode have not experienced significant changes since1998. On this basis, the paper using chart and data methods makes a full discuss about the mechanism, environment and the of policy transmission channel according four aspects:the credit channel, interest rate channel, exchange rate channel and capital market channel. On the analysis of the conductive effect, the paper gives a consideration about different economic periods. Then, the paper makes empirical test about the effect of transmission. Considering the difference between inflation and deflation period, the paper selecting quarterly data, makes Granger Causality test and elastic analysis, dividing the period in two states:deflation period (1998-2002) and inflation period (2003-the first half of2008), in order to investigate that the influence on the economy from the effect of different transmission channels.The results showed that the credit channel is still the main transmission channels of monetary policy, the channels in interest rates and exchange rate play an important role in the monetary policy transmission. With the gradual improvement of the institutional mechanisms and the gradually movement toward standardization of capital market development, especially in resource allocation, property transaction and value discovery, the capital market channels will become more and more important in monetary policy transmission. The inspection also found a certain extent of asymmetric effects of monetary policy in the channel conduction. Finally, the paper pus forward some suggestions about unblocking and improving the efficiency of the monetary policy transmissions.This paper has two main innovations:Firstly, in the channel of the analysis, the paper considers the economic cycle factor, which makes the analysis and evaluation more reasonable.Secondly, in the aspect of empirical analysis, this paper selects the special historical stage:1998-2008. In this phase, monetary policy has been to indirect way. Monetary policy tools, target system, operating mode do not have significant changes. The selection of research period makes the analysis more scientific and precise.