A Comparison Study On Monetary Policy And Its Effect In The Last Two External Shock

Monetary policy is an import means that the central bank uses toadjust and control the total economy,effective monetary policy plays animportant role in the development of the economy. In the increasinglycomplex background of the economic situation at home and abroad,how themonetary policy plays a role in the economy becomes an important task forthe central bank.In recent years, a lot of theoretical analysis and empiricalresearches focused on the effectiveness of monetary policy regulation,butmany of them only aimed at a certain period.This paper compares andanalyzes the monetary policy used after the1997Southeast Asian financialcrisis and the2008global financial crisis,and attempts to reveal the reasonswhy two equally loose monetary policy will have different effects.This is ofgreat significance to summarize, refining the practical experience ofChina’s monetary policy.This study mainly include the following four aspects:First, retrospectively overview the process of the Southeast Asian financial crisis in1997and the global financial crisis in2008, andqualitatively analyze the impact of the two exogenous shocks on China’sexport trade, foreign investment and financing, and the financial system.This is an important background of the two monetary policyimplementation.Secondly, make a comparative analysis of China’s monetary policyand its effect after the two exogenous shocks.This paper takes the openmarket operations, the benchmark deposit and lending rates, the statutorydeposit reserve ratio and credit policy to compare the monetary policycontent.Then starting from the monetary policy transmission process,thispaper analyses and compares the impacts of the two monetary policy onoperating variables, mediating variables, and the ultimate goal of variables.The results showed that the two monetary policies in general achievedcertain effects, but the effects of the second round monetary policy is betterthan the first one. whether from the expansion of base currency and moneysupply or the consumption, investment and net exports.Thirdly,analyzes the impulse response of the money supply (M2) and the inter-bank lending interest rate to the GDP and CPI in the VAR model.The result showed that (1) the impact of M2to GDP and CPI is obviousthan interest rates. Although the recession can be controlled by the interestrate policy, but the economic growth effect is not obvious,at the same timethe price level is not stable enough. relative to interest rates, GDP gives apositive response to M2after two exogenous shock, the price level is alsoable to maintain a steady state.(2) The second round of monetary policyeffect is obvious than the first one. In the first round of easing monetarypolicy, the deflationary pressure does not get effective relief, and theeconomy dose not achieve rapid growth. But in the second round ofstimulus, the price get stable and the recession get alleviated.Finally, combine and analyze the causations that lead to the twodifferent monetary policy effects.This paper summed up the followingaspects:(1) differences in the operation of monetary policy and creditstructure, such as the timeliness of policy tools and the intensity differences,the differences of the credit structure;(2) economic institutional differences,such as the reform of state-owned enterprises, the reform of the housing system;(3) fiscal policy and monetary policy mix differences;(4)differences in the ability to withstand economic risks after two exogenousshocks.(5)differences in international economic environment. By causalanalysis, we can get some experience to improve the effectiveness ofmonetary policy in China.