Study On Regional Difference Of Monetary Policy Effect In China

Since the reform and opening-up policy, along with China’s rapid economic development, economic system has changed gradually from the traditional planned economy system to market economic system transition. In the process of economic system transition, the regional economic development and financial environment has gradually made a bigger difference. The difference was weakened by the unified monetary policy implementation effect, which caused the regional effect of monetary policy differences. In recent years, with the rapid development of economy in our country, monetary policy has been often used to adjust macroeconomic by central Banks. And the differences of regional effects which become more complex and severe monetary policy arise on the front of us. So under the premise of optimal monetary policy formulation and implementation, how the central bank fully considers major regional imbalance between the economic and financial and makes its maximum effect appear particularly significant.Based on optimum currency area theory, the effectiveness of monetary policy theory and the theoretical basis of monetary policy transmission mechanism, we take panel data from32provinces, municipalities and autonomous regions from1985to2011as samples, the regional differences between our country monetary policy output effect and price effect of monetary policy has carried on the empirical research. First of all, from the perspective of the result of monetary policy effects, in China’s eastern, central, west and northeast, the sensitive coefficient is significantly different.,Monetary policy obviously different between developed region and undeveloped region. Monetary policy effect difference in four major economic plates is obvious. Secondly, from the result of monetary policy price effect, coefficient, the supply of money in the four areas is small. So the relationship between money supply and inflation is not significant.But money supply between four areas has certain difference. Order of quantity, they are eastern, northeast, central, western. So impact of the price impact of currency on all areas exist certain differences. The monetary impact reflects the western region most obviously. The reason may be that most of the western region is the poor areas, and commodity competition is lower than in the eastern region. When external shocks appear, the range of the price fluctuation will be higher than in the developed regions. After using the panel data model to analysis our country regional effects of monetary policy, we found that from the perspective of monetary output effect or the perspective of monetary policy effect price, there are regional differences under the unified monetary policy in our country.Regarding to the cause of this difference, this paper shows a combination of empirical analysis and description analysis to study this problem, the study found that regional economic development level, industrial structure, financial development level and the contribution rate of capital will affect regional monetary policy effect. These differences increased the difficulty of the implementation of monetary policy in our country. Whether monetary policy transmission mechanism of itself, or in coordination of the regional economic development makes the role of the unified monetary policy differences between different areas.In order to solve the problem of regional effect of the monetary policy, we should not only prevent economic gap between different areas caused by the implementation of unified monetary policy, but also promote regional coordination of financial and economic development, improve the unified monetary policy in the implementation of the regional effect. On the one hand, we should adjust proper measures to local conditions. Under the unified monetary policy, we should implement the different regional monetary policy, including regional differentiation of credit policy, the regional differentiation of monetary policy tools. On the other hand, at the macroeconomic level, we should continuously promote the region economy developing, promote the financial structure be optimized, promote financial market diversified, and fundamentally remove monetary policy obstacles caused by regional effects.