| The monetary policy refers to the total of policy and measures that a central bank adopts regarding regulating and controlling of money supply and money circulation in order to realize preset economic targets. Monetary policy includes monetary policy targets, monetary policy instruments and monetary transmission mechanism. The monetary transmission mechanism is mainly study on how the monetary policy takes impact on the real economy through a variety of financial variables. It connects monetary factors and real economic activity, and determines the effectiveness of monetary policy.This paper takes China's monetary transmission mechanism since 2002 as the research object, and makes a research on the operating mechanism and propagation effects of China's monetary transmission channels, through empirical analysis of relevant economic data. In the specific research methods, this paper mainly uses the contemporary mainstream econometric research methods; include the unit root test, the co-integration test and the Granger causality test. Then this paper makes vector autoregressive models and a deeper level of short-term dynamic analysis using the approach of impulse response and variance decomposition. The purpose of writing this article not only lies in getting a basic judgment on the effectiveness of China's monetary transmission mechanism, but also wants to improve the financial environment, promote the construction of financial markets and the reform of financial system.This paper describes the basic overview of monetary transmission mechanism in China, and makes empirical analysis on the effectiveness of monetary transmission mechanism in accordance with four transmission channels, including the interest rate channel, credit channel, asset price channel, and exchange rate channel. The results show that the effectiveness of credit channel is high, but the effectiveness of credit channel, asset price channel and exchange rate channel are low. Then on the basis of the empirical research, this paper makes analysis on the influencing factors of the monetary transmission mechanism. Finally, according to the research findings, this paper makes countermeasures and recommendations to improve the monetary transmission mechanism. |
