The Effectiveness Of Monetary Policy In China's Regional Differences :2003-2009

It' s been a long time since people discussed and studied the validity of monetary policy,mainly focusing on the transmitting channel and the effects.Since the financial crisis happened in the late 90s of 20^th century, China has entered a new era with the symbol of deflation and more and more academicians have attended to fiscal and monetary policy.Since 2003, domestic economic environment has changed dramatically.The economy has begun its way to another round of boom.Excess liquidity appeared and worsened after that,which caught much attention all over the country. Although the central bank raised the deposit and lending rate as well as the reserve rate time and again,the effects seemed limited.In the end of 2007,the influence of sub-prime mortgage crisis penetrated China and the economy began to decline.All through the six years from 2003 to 2008, the monetary environment of China has experienced a great change.But related study and analysis focusing on the effects of monetary policy is rarely seen.This is the theme of this paper,concerning about the validity of monetary policy after 2003.According to different characteristics of this period,the study will be divided into two parts,including the analysis under the environment of excess liquidity and international financial crisis.PBOC implemented contract monetary policy energetically between 2005 and 2007,executing various policy tools synthetically,but it turned out to be unsatisfactory,leaving monetary policy to be questioned and blamed. Some of scholars have studied the effectiveness of monetary policy under the circumstances of excess liquidity.These study mainly focused on the integrate effectiveness domestically,while regional effectiveness never being evaluated.It is not proper for us to neglect the diversity of situations of all different regions under excess liquidity.China' svast territory tolerates a considerable economic imbalance between various regions,especially after decades of reform and development.Nobody can deny excess liquidity domestically,but regional situations are various. Here are the Questions:Whether uniform monetary policy takes care of the regional economic unbalance effectively,any regions over-adjusted or under- adjusted? In this paperⅠwill try to use panel data model and VAR model etc.to verify the regional effectiveness of monetary policy under excess liquidity.After that I will analyze the policy puzzle and the impact of monetary policy under the international crisis.At last possible measures which may enhance the policy effectiveness will be discussed.