Study On The Effect Of Monetary Policy Quality On Exchange Rate Transfer Effect

The world economy has just begun a slow recovery after the last financial crisis.However,in the new era,the world economy is faced with the rise of trade protectionism and the economic or political black swan incident in the United States,the European Union and other countries.The world economic environment is faced with more uncertainties.In the face of these uncertainties,the exchange rates of various countries have also changed in different situations.We traditionally believe that the exchange rate level will also affect the domestic price level in many ways.Therefore,exchange rate transmission efficiency,a traditional macroeconomics topic,deserves our attention in the face of new circumstances and has important significance for maintaining economic stability.Through literature research,we can know that the exchange rate transmission efficiency began to decline steadily until the end of the 1990 s.At the same time,the inflation environment in various countries has also improved significantly.Therefore,scholars have studied and affirmed the relationship between the inflation environment and the exchange rate transmission efficiency.relationship.In addition,scholars have also begun to pay attention to the impact of central bank independence and transparency on the efficiency of exchange rate transmission.The mainstream view is that improving central bank independence and transparency will help fully play the role of monetary policy and achieve monetary policy goals.At present,domestic scholars mainly study the impact of inflation environment on exchange rate transmission efficiency based on domestic data,so it is of great significance to study the impact of policy system quality on exchange rate transmission effect.This paper is based on the delayed distribution model used by Campa and Goldberg(2002),this paper studies the exchange rate transmission mechanism with reference to the treatment methods of Antonia Lopez-Villavicencio and Valérie Mignon(2016).This paper uses the IMF,BIS and World Bank databases from 1994 to 2016 to obtain economic data such as nominal effective exchange rate,consumer price index,and inflation rate in 98 economies,and constructs a delayed distribution panel model to carry out empirical analysis.The following conclusion is drawn: First,the exchange rate transmission mechanism exists significantly,that is,the nominal effective exchange rate changes will affect the domestic price level.On the one hand,the depreciation of the exchange rate will cause the price of domestic imported goods to rise,so as to raise the domestic price level;On the other hand,higher domestic commodity prices are further driven by higher domestic commodity prices as foreign consumers can consume their goods at lower prices because of the devaluation of exchange rates.Second,both inflation levels and inflation volatility affect the exchange rate transmission effect.First,we find that the higher the level of inflation and the higher the rate of inflation volatility,the stronger the exchange rate conduction effect,but with low inflation.Inflation level and inflation volatility have no significant effect on the exchange rate conduction effect.Third,the transparency of central bank policies and the independence of central banks will have an impact on the transmitting effect of the exchange rate.The higher the transparency of central bank policy,the weaker the exchange rate conduction effect.Similarly,the greater the independence of central banks,the weaker the exchange rate transmission effect.