The Research On The Industry Effect Of China’s Monetary Policy In Open Economy

For a long time, monetary policy is the main ways for Chinese macroeconomicregulationandmain toolsto achieve macroeconomic objectives. Monetary policy makes an impacton the real economy through monetarypolicy transmission channels by using monetarypolicytools. Currently, thereisnoconsistencyconclusion on thediscussionaboutthemonetary policy transmission channels. The paper uses the division recognized by most academic circles that the monetary policy transmission channels includes monetary transmission channels (interest and exchange rates) and credit channels (bank credit channels and balance sheet channels).Therefore, the factors that influence the effectiveness of monetary policy not only include monetary policy, but alsoinclude monetary policy transmission channels, andthecharacteristics of the real economy, taking real economic business cycle for example.In recentyears, thereal estatemarketisbooming, andevenreachedthecritical pointofthebubble, while the manufacturing industries in Dongguan and other cities are experiencing a significant decline inoutput value. This phenomenon presents theeffects ofmonetary policy inthe industryin front of thetheoreticaland academic circlesonce again, causing the academicand theoreticalcircles paying closeattention and making intense discussion. Before, academia has done a lot ofresearch anddiscussionon it, but the premiseswere establishedinaclosed economy. WiththedevelopmentofChina’s economicand financialstrength, capitalaccountwillbegraduallyliberalized, then, China’s economywill usher in thegreat feat-the full liberalization of economic. Under the open economy, on the one hand, the communication between China andworldwide willbemore and more, and the interdependent andimpactsbetweenthemwill also be larger and larger; on the other hand, there will be a lot of newchannels that China will beaffected by the globaleconomics. Itwill make the effectivenessof China’s monetary policyare not only affected bydomesticfactors, but morecloselyrelatedto foreignfactors. Thus, itisnecessarytostudy andexplore theeffectsofChina monetary policyinindustryunder the open economic.This articleis premised on open economy, usesIS-LM-BP modelandtheCobb-Douglasproduction function that I have learnedtobuildatheoreticalmodelandframeworkforempirical studies. And next I select the appropriatevariableto build VAR model according tothetheoreticalmodel and analyzetheimpactofChina’s monetary policyonvarious industries through Impulse Response Function. Finally, it demonstrates the existenceofindustryeffectsofmonetary policy. Thenfromthetransmission channelsofmonetary policy, thebusiness cycleandtheindustry’s owneconomicabsorberperspectivetostudythe reason thattle industryeffect of monetary policy exists inan open economy. Finally, basel on thedifferentiated industry policy that China has implemented, this article offers some optimization recommendationsfromtwo anglesofthemonetary policy transmissionchannelsandmonetary policy tools, in order toachieve thegoalofimprovingtheindustry effectofmonetary policyinChina.