Regional Differences In Monetary Policy Transmission

Currently, the differences in level of economic development, each area’s eeonomic structure, financial development, degree of openness, etc, are more and more significant in China. Neglecting the imbalanced domestic economic development of all regions and designing or implementing an unified monetary policy may weaken the effeetiveness of monetary policy and inerease the differences of regional economy, inducing regional economic development imbalances.In theory, the paper market should play an important role in the monetary policy transmission process. In China, a low level of development of the bill market did not attach importance to the academic study of the process of monetary policy transmission through the paper market. Since discounting of bills, finance rely on the behavior of the real economy, the bill market is closer to economic activity than the bank credit market. Therefore, the research on paper market can provide theoretical support for the implementation of monetary policy.According to Bernanke’s transaction cost theory, the discount rate can be looked as transaction costs of the credit market, while conjecture put forward in this paper:In China, there are regional differences in conduction effects of monetary policy, and compare the different effects.This paper selects the appropriate variables to establish a simplified bill market conduction path of a monetary policy. An Empirical Study of the use of VAR models confirmed the regional effects of monetary policy, monetary policy effects gradually weakened from east to west, while conduction effect on the overall bias. This is contrary empirical conjecture before, mainly due to the effects of monetary policy instruments market is largely conducted by the paper market developed degree of control.This paper market backwardness of necessity and development of China’s paper market reflects from one side.Finally, according to China’s actual situation, this paper presents some of the bills for China’s regional markets and monetary policy regionalization ideas and suggestions in order to be the healthy development of China’s paper market, for its truly becoming of the monetary policy transmission motivating factor; while monetary policy local conditions, to adapt to the different regional economic development level, ease China’s unified monetary policy and differentiated contradiction between regional characteristics and improve the effectiveness of monetary policy.