The Research On The Industrial Asymmetry Effects Of Monetary Policy

With the rapid growth of China’s total economic output, the optimization and upgrading of industrial structure increasingly play an important role to promote the sustained development of economic society. The appropriate economic policies, especially the monetary policy, which is a "good medicine" to optimize the industrial rational layout and promote the industrial balanced development. Previous studies suggest that, compared with other economic policies, the advantages of monetary policy as a market behavior lie in that it doesn’t cause crowding-out effect on the market, and it regulate the economy more gently and flexibly, that will in favor of the market play a decisive role on the distribution of resource. In the background of China’s market economic system is not perfect and the monetary transmission channels is not smooth enough, the cause of that the monetary policy play a weak role in the adjustment of industrial structure is that the industrial asymmetry effects of monetary policy. Therefore, this paper will analyze theoretically and empirically the industrial asymmetry effects of monetary policy based on summarizing relevant literature. In the hope of providing some guidance which can improve the effect of China’s monetary policy in promoting industrial development.In this paper, we should firstly review the method about non-neutrality of Money. Non-neutrality of Money is the theoretical premise of the industrial effects of monetary policy, it is recognized that monetary policy does have a substantial impact on the economy. Afterward, this paper will discuss the transmission mechanism of monetary policy, and theoretically analyze the industrial asymmetry effects of monetary policy based on different transmission channels. Then selecting the money supply (M2), loans of financial institutions (LOAN) and three industrial outputs (PI, SI,TI ) as a research variable, using a measure of SVAR models empirical research. The results show that China’s monetary policy has a significantly asymmetric effect on three industrial outputs. On the whole, the first industry is affected by monetary policy mostly; the second and third industries are affected by monetary policy least. This asymmetry is due to the differences of tertiary industries in credit dependency and consumption level, the reaction of the industry with high credit dependency and consumption level to monetary policy are much more responsive compared with the industry with low credit dependency and consumption level. To a large degree, the difference of credit dependency and consumption level between the industries is depending on the country’s economic level and the difference of financial frictions and so on. Finally, in order to further improve China’s monetary policy and enhance the effectiveness of monetary policy to promote industrial development, the paper will put forward four advices on improving the effectiveness of monetary policy that based on theoretical and empirical results which obtain from this analysis.