Research On The Regional Effects Of Monetary Policy In China

Since the reform and opening-up, in the process of continuing to push forward thereform of China’s market economic system, the role of monetary policy is increasinglyimportant, is an important regulatory tool for the Government in realization to maintainprice stability, promote economic growth and other macroeconomic objectives. However,Due to regional differences in levels of economic and financial development, Income andconsumption levels of residents, industrial structure, and regional differences in thedegree of market-oriented, so that the implementation effects of our "one size fits all"monetary policy in different regions, there are differences, mainly for the reaction rateand extent of different regional’s output and prices are big differences when theyencounter with the same monetary policy shocks. This situation has severely hindered theeffective implementation of monetary policy, reducing its overall validity, evenexacerbate the non-equilibrium level of social and economic development in China. Howeffective solution to this problem has been widespread concern of the central bank andtheorists.On the basis of combing domestic and foreign scholars on the study of monetarypolicy effects, establish the theoretical framework to reflect the regional effects ofmonetary policy-Regional AD-AS model, use VAR model to study the different effectsin the same monetary policy shocks on East region, middle region and western region;And different consumption level of residents on the regional effects of monetary policy isanalyzed by theoretical and empirical. At last, propose the proper suggestions.The theoretical analysis shows that encountered with the same monetary policyshocks, the output change of the eastern part is greater than the ones of middle part andwestern parts, while the prices effect of the various regions is uncertain. The empiricalresults show that the reunification of our country’s monetary policy in the eastern, middleand western regions does have the different effects. For the impact of monetary policy, the eastern part of the real output changes faster than that of middle and western regions,responsiveness is also largest; although the reaction rate of price effect in differentregions is almost same, there are some differences in response depth. Analysis of the regional consumer savings behavior show: the precautionary savings motive of residentsfollowed by the eastern region, the middle region, the western region, from weak tostrong, and then the interest rate elasticity of consumption is a gradient increasing trendof the western, middle, eastern part. Therefore, from regional scope perspective, theeffect of monetary policy from small to large order of the western, the middle and eastern;from a nationwide perspective, the effectiveness of monetary policy fell.To improve the effectiveness of monetary policy, this article suggests, shouldimplement the regional differentiation of monetary policy. In the long run, should striveto improve the income level of the middle and western regions, narrow the income gapbetween regions and the level of consumption gap.