| Monetary policy efficiency depends on country's monetary policy transmission mechanism, and in turn, it is the economic and financial structure of the country that determines transmission mechanism. Presently, China's economy is undergoing a process of transition, and monetary policy is changing from direct control towards an indirect one, which means transmission mechanism is very complicated.In order to keep the economy growing in the long run, a series of monetary measures aiming to stimulate economy have been taken since 1996. But the growth rate still shows declining trend by 1999, economic situation is still serious grim. Of course, in order to attain policy objectives, both monetary policy and fiscal policy should be employed. However, both of these two kind of policies have their own characteristics: the implement of fiscal policy will increase investment and stimulate growth of the economy directly； while monetary policy indirectly influence the economy. Ihe impact is more complicated. So it is necessary to have deeper study on monetary policy.This thesis aims to analyse the four main approaches dealing with monetary policy transmission mechanism: interest rate approach of Keynes school, nonmoney assets price approach of monetary school ,Postkeynesism credit rationing approach,and international exchange rate approach. It tries to find out what is the corresponding economic and financial structure of each approach. Then by examining the most recent development in financial system and overall economy of our county,the author attempts to put forward some useful suggestions for establishing effective monetary policy transmission channels in our county. The thesis has three parts. The first chapter is mainly on the basic theory of monetary policy transmission mechanism according to western economics. Monetary policy transmission mechanism is the process that central bank through exerting monetary policy instruments,causes certain variables of finance domain and real economy domain to change, which will ultimately influence the aggregate economic activity and help reach the ultimate goals. This chapter shortly describes the common process about monetary policy transmission mechanism from two aspects :first ,it analyse and evaluates different viewpoints of various academic schools in west economics; second it reviews economies and financial structure which is the determinant of the actual effect of monetary policy .Some conclusions have been reached.The following is argumentations about monetary policy transmission mechanism 1, Keynes school's interest rate approach Facing the economy crisis in 1930s,keynes thought,government interference is inevitable, and fiscal policy is the only effective policy .They admit that money supply affect price, employment and GDP , but investment is more important. The main factor affecting economic output level is investment, money supply only exerts an accessory function .What's more, the influence of money supply is indirect, that is, the change in money supply first affects interest rates, and interest rates influence investment, in turn, investment influence output and price.Keynes's interest rate theory is based on selection of only two assets: money and long-term bond. It is somewhat limited when huge government bond outstanding becomes common due to pursuing active fiscal policy. So some scholars extended Keynes's interest theory, the most important of which was Tobin's q-model. The q coeffectiont, which equals company's market value divided by its replacement cost, sheds some more light on how interest rate affects investment.2,money school's non money assets price approachMoneyism indicated that the change of other relative price of assets (besides interest rate) and actual wealth is the main channel of monetary policy transmission mechanism. Nominal money supply impact is neutral in the long run,and only in short period will it change relative price ,and real output. This is because it takes tim... |
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