Monetary Policy Regime Switching And Asymmetry Effect

According to points of view of the Keynesian economics, the economic policy against the stream can effectively smooth economic fluctuations. However, rational use of monetary policy tools to regulate and control the macro-economy efficiently has always been one of the core concerns of macro-economic theory study and national central banks. In order to reveal the dependency of the monetary policy transmission mechanism(credit and interest rate mechanism) to economic state, this paper, under the current status of China’s monetary policy interest and credit transmission channel as the research background and the premise of the effectiveness of monetary policy, established the Markov Switching Vector Auto Regression Model based on China’s macroeconomic data from first quarter of1992to the fourth quarter of2011, and discussed the asymmetry of China’s monetary policy state with the help of state-dependent impulse response function.Empirical results show that,(1) China’s monetary policy transmission mechanisms are non-symmetric, the two-district MS-VAR model can well reflect the role procedure of credit transmission path of monetary policy on macroeconomic system, but the interest rate transmission path of monetary policy on the role procedure on the macroeconomic system requires three-district MS-VAR model to describe; obviously, the district characteristics of the transmission mechanisms reflect the different response of monetary policy on the inflation rate and real output;(2) the inhibitory effect of tight monetary policy in economic expansion is significantly greater than the stimulate effect of expansionary monetary policy in economic contraction;(3) interest rate transmission channels of monetary policy in China has already begun to play a role and continue to strengthen the role, its district system has an apparent shift before and after the exchange rate reform, and interest rate can be applied to the intermediate target of monetary policy.