Financial Friction, Credit Rationing And The Comparison Of Different Monetary Policy Instruments Effects

In the constraints of financial friction and state-owned investment proportion,within the logical framework of Walrasian economy, this paper constructed atheoretical model which embodies China’s economic structure, but also in line withthe mainstream of economic logic, opening the monetary policy transmissionmechanism "black box". Then, the transmission mechanism and the effects ofdifferent type of monetary policy tools in China were analyzed based on the model.We put forward the hypothesis and test them. Following important conclusions wereobtained: First, as long as the full account of the characteristics of incomplete markets,Walrasian logical framework for conducting monetary policy in China can stillprovide a strong explanation; Second, derived from incomplete markets, the effect ofmonetary policy should be sensitive to the type of monetary policy instruments,monetary policy function should include both total and efficiency factors, monetarypolicy has the endogenous effect of stage characteristics and other policy implications.Third, in the sense of monetary policy effect, the performance of interest rateliberalization is closely related to the character of the media which formed byeconomic ownership structure, financial friction and so on. The implication of interestrate reform is far from just price liberalization of financial resources, but a systematicengineering.Structure of this paper is arranged as follows: the first part, summarized theoverseas research on optimal monetary policy rule theory and the development path ofmonetary policy transmission mechanism theory. And the change of the theory whenwe take financial friction as a new constraint condition. Then elaborated the domesticresearch related to our article from three aspects: one is the study of monetary policytransmission mechanism; the second is about the study of the classification of themonetary policy tools; the third is research on China’s monetary policy consideringChina’s economic environment of certain particularity. The second part, constructedtheoretical model on the basis of previous studies and put forward the hypothesis. First of all, based on the credit rationing model of Stiglitz and Weiss, we compared theeffects of different types of monetary policy tools. Secondly, put forward thehypothesis1. After then, considering the property rights, we developed basic modeland put forward hypothesis2. The third part, proof of hypothesis and robustness test;The fourth part is the conclusions and policy implications..