Research On Industrial Effects Of Monetary Policy Based On The Perspective Of Capital Flow

As one important issue of the asymmetric effect in monetary policy，Theindustrial effects of monetary policy，has been paid to close attention by decisionmakers and macro policy-makers. The industrial structure，which is reasonable ornot，is directly related to the sustainable, healthy and harmonious development ofnational economy. Traditional theoretical studies are mostly analyzed the total effectof monetary policy on condition that monetary policy has the same effect and impacton the entire economy and inter-industry. However, in fact, this assumption is notfully reasonable. In recent years, more and more researchers have proved thatmonetary policy has different effects on different industries, but people have kindsof view on its mechanism and determinants because lack of empirical tests. So deepanalysis of the formation mechanism of the asymmetric effect of monetary policyprovides a theoretical basis to government for making monetary policy, and it’s alsogives us a theoretical basis to play the function of adjusting industrial structure ofmonetary policy.In this paper, on basis of that the asymmetric effect in monetary policy shouldexist and refer to the general theory, firstly, we dig into this asymmetric effect theoryof origins—capital flows between industries, so as to attempt to open the analysistheory of back-box. And then we analyze the transformation mechanism of industrialstructure influenced by capital. Secondly, by referring to the Jeffrey WurgIer’scapital allocation model and linking Chinese industrial structure feature, we makeefficiency model of industrial capital that involves Money supply、Industrial addedvalue、Industrial fixed assets investment and Industrial sentiment index. Thirdly, westudied the first, second and third industry and used quarterly data from2001to2010, the results showed that even by adjusting of the same Monetary Policybecause of profit driven and risk-averse capital will flow to the industries where theycan get high profit. Therefore industries will develop differently because of unequalcapital input. So we made conclusion that the second industry influenced strongly bythe monetary policy, followed by the third industry and then the first industry.There are two possible innovative aspects in this paper. One innovation is theresearch perspective. The current researches in home and abroad mostly connectmonetary policy and industrial structure together, few researches connect amount adjust and structure adjust together, not to mention to discuss the reason of theformation mechanism of the asymmetric effect in monetary policy from themacroscopic angle and the medium level. We want to try to reveal the rool reasonsthat behind the asymmetric effects of monetary policy from the point of capital flow.The other innovation is the model. On foundation of Jeffrey WurgIer’s capitalallocation model and real condition of Chinese monetary policy and industries, webrought increase rate of money supply, industrial prosperity index, industrial addedvalue and related variables into our model for analyzing. Then we use the result todescribe the reason of formation mechanism of asymmetric effects of monetarypolicy influenced by capital flow.