An Analysis of the Effectiveness of China’s Monetary Policy Transmission Mechanism on GDP: Based on Vector Autoregression Model

Xianquan Meng ()
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Xianquan Meng: Universiti Kebangsaan Malaysia, Fakulti Ekonomi Dan Pengurusan

A chapter in Proceedings of the 2024 3rd International Conference on Public Service, Economic Management and Sustainable Development (PESD 2024), 2024, pp 149-160 from Springer

Abstract: Abstract How monetary policy affects the level of macroeconomic development is one of the issues that economists have studied deeply. Based on quarterly data from 2004 to 2023, this paper establishes a VAR model and studies the effectiveness of credit channel and money channel on monetary policy transmission through Johansen cointegration test and Granger causality test. The results show that both of them are beneficial to the role of monetary policy, but the correlation between them is small. In addition, the credit channel is the main channel of China’s monetary policy transmission, although the role of the money channel is relatively stable but the influence is small. Based on the content of the study, the authors propose relevant policy implications to facilitate the effective functioning of China’s monetary policy.

Keywords: monetary policy transmission mechanism; the amount of money supplied; credit channels; GDP; VAR model (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-598-0_17

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DOI: 10.2991/978-94-6463-598-0_17

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