Study On Regional Difference Of Monetary Policy Effect In China

The effect of monetary policy has been one of the hot spots in the fields of economics, which research can consummate the monetary policy theory, and enable the monetary policy execution to achieve the biggest achievements. Traditional points referred that the monetary policy should have consistency results. This point ignores the non-equilibrium of the economy in the same country (currency areas) which has important reaction of the monetary transmission mechanism, so the same monetary policy in different regions may have different effect.Since the reform and opening-up policy, China has in the process of economic transition adopted a regional development strategy through a sequential approach. As a result, the homogeneity in regional economy gradually died away .The uniform monetary policy generated asymmetrical effects throughout the country and some areas even suffered from completely adverse effects. With the reform and open policy step by step, China has diverse provincial characteristics through the whole nation, more and more complex regional questions appear in ours front.This paper mainly consists of four parts. The first part based on the theory of optimum currency areas and the monetary policy transmission mechanism theory, the author of this Paper analyzed the regional differences of monetary policy effects. Based on the theory of Optimum Currency Areas and the domestic and foreign research results, the second part shows that monetary policy of China has indeed an obvious regional effect,by using VAR model and impulse response function and adopting the annual sample data. The third part analyzes why our country exists the regional effectiveness of monetary policy. Finally, based on these factors try to make policy recommendations to help reduce the regional effect of monetary policy in China.