A DSGE Analysis of Asymmetric Monetary Policy Transmission in China

Pengqing Zhang and Jiancai Pi

Scottish Journal of Political Economy, 2025, vol. 72, issue 5

Abstract: This paper analyzes the asymmetric transmission of monetary policy between state‐owned enterprises (SOEs) and privately owned enterprises (POEs) in China by developing a DSGE model that incorporates both financial constraints and government intervention. We find that a positive money supply shock benefits SOEs more than POEs. Notably, even when financial constraints faced by SOEs and POEs are the same, a positive money supply shock can still produce asymmetric outcomes. However, when the level of public infrastructure provision is sufficiently high, the resulting productivity effect can largely offset this asymmetry.

Date: 2025
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