Research On The Transmission Mechanism Of Monetary Policy From The View Of Balance Sheet

Currency plays more and more important roles in economy, especially with the development of the opening of the economy and the great reform of finance environment .But with the complication of human's economic behavior, the effect of monetary policy is wearing off At the same time, the transmission mechanism of monetary policy is disturbed by many factors and experiences intricate fluxes. During the execution of money policy, the transmission mechanism of monetary policy is the ligament that bridges policy factors with the whole economy. Any research on the monetary transmission will be helpful for the monetary authority to use money policy to adjust macro-economy.The methods that have been used to research the transmission mechanism of monetary policy mainly include theory models analysis, the benefits of monetary transmission channels analysis, financial structure analysis and the relations between monetary factors analysis. In this paper, it does some research on the transmission mechanism of monetary policy from the view of balance sheet, using the methods of theoretical test and empirical test. This analysis focuses on the effect of human's economic behavior on monetary transmission. This paper aims to prove that price will be the guider in the transmission mechanism of monetary policy. Four main conclusions come from this paper :1, human's behavior is a very important factor that affects the transmission mechanism of monetary policy; 2, the power of "price guider" will blur the distinction between different transmission channels, and price will become a core factor in transmission channels; 3, it is more helpful to pay attention to currency rules rather than to the transmission mechanism; and 4, in order to improve the effect of money policy, policy-makers should pay more attention to human's behavior, and our monetary authority should be further independent.The innovation of this paper lies in its analysis view——from the view ofbalance sheet. In this analysis, quality analysis is combined with quantity analysis in order to post which factor plays a core role in the transmission mechanism of monetary policy. Considering its shortcomings, this paper is lack of new demonstration analysis. It was designed to do some research following the model of Carlo A Favero, Francesco Giavazzi & Luca Flabbi(1999), but failed due to the constrains of data. The direction of further researches should be on exploring more methods to do demonstration research on monetary transmission.A "part to whole" structure is used in this paper. Chapterl makes an introduction to this research. Chapter 2 is a theory introduction to the transmission mechanism ofmonetary policy. Chapter 3 does an explanation about this paper' analysis view——balance sheet, to demonstrate the feasibility of this analysis view. Chapter 4 analyses the transmission mechanism of monetary policy from the view of balance sheet, which is the body of this paper. Chapter 5 comes to some research conclusions and points out the direction for further researches.