A Research On Regional Effects Of Monetary Policy

China as an economic transition period in the development of the country, itsmonetary policy transmission both has the general of developing countries, also hasits particularity of the major economy. Therefore, it is very significant to deeplyresearch Chinese uniform monetary policy’s provincial asymmetric effects anddeterminants because this study can improve operational effectiveness of monetarypolicy and facilitate the balanced regional development.Firstly, this article summarizes home and abroad literature on the asymmetriceffects of monetary policy, based on this, having a theoretical analysis on thetransmission mechanism of regional effects of monetary policy from monetarychannel and credit channel aspects. Then, given the availability of data, this articlecollects the1978-2010of money supply, credit scale, fixed assets investment, retailprice index related data. Afterwards, based on the study of Hsing and Hsieh (2004),using the model of VEC to choose the represent variable of monetary policy and paneldata model to investigate Chinese monetary policy’s provincial effects. The empiricalresults show the theoretical hypothesis is correct. Monetary policy exist significantdifferences between province and the provinces.Then, according to the empirical results, we analyze the reasons of the regionaleffects of monetary policy. Firstly, from the provinces, economic and financialdevelopment difference of the two aspects to make qualitative analysis. Secondly, byconstructing China’s monetary policy impact of provincial response value and maininfluencing monetary policy transmission and regional characteristics of variableregression equation to carry on the analysis. It is concluded that monetary policy ofthe regional economic effect which is negative correlation with tertiary industryaccounted for the proportion of GDP and the efficiency of financial development andpositive correlation with secondary industry accounted for the proportion of GDP.Finally, based on regional economic development not balanced and the empiricalanalysis, this paper made some policy recommendations to reduce the economic andfinancial difference between different areas of China.