The Research of the Regional Effects of Interest Rate Policy of China
|School||Nanjing University of Finance and Economics|
|Keywords||The three major economic circles Interest rate policy Regional effect VAR model Panel regression model|
With the further deepening of the international financial crisis and the outbreakof the debt crisis in Europe in recent years, more and more countries began to payclose attention to the interest rate risk. European countries, the United States and otherdeveloped countries gradually abandoned money supply, which is the intermediatetarget in the traditional monetary policy, and use interest rate policy. With theadvancing of market-oriented reforms, our country’s central bank also graduallyemphasize the use of interest rate tool. Due to the implementation of the “unbalanceddevelopment strategy” since the reform and opening up in our country, the regionaleconomic differences are very huge, and the unified monetary policy will inevitablyproduces regional effects. As China’s economic growth pole, the three majoreconomic circles’ industry and firm size, economic openness and financialdevelopment are different. Can the differences lead to the regional effects of theinterest rate policy? What are the causes and inner mechanism? To choose the coastalthree major economic circles as the object of study area has an important economicand strategic significance on the one hand, and also can draw a more specific reasonfor the regional effects of the interest rate policy and thus help us construct a morereasonable analytical framework, which will lead government to a more targetedimplementation of interest rate policy and regulate macroeconomic more reasonable.Based on the above reasons, we select our country’s eastern coastal areas ofJing-Jin-Ji Delta, Yangtze River Delta and Pearl River Delta as the research area ofthe regional effects of interest rate policy, the main content is as follows: First, we usecomparative analysis method and start from the perspectives of economic structure,financial structure, as well as the economic cycle that may lead to the regional effectsof interest rate policy, and summarize the differences in economic levels of the threeeconomic circles. Second, based on the summary of the relevant research, we use thelogical reasoning method to expand the theoretical analysis from two aspects, whichare the regional effects of interest rate policy’s AD-AS theoretical models and themechanism of the regional effects of the interest rate policy, then come to theconclusion that regional effects of interest rate policy are mainly due to thedifferences of interest rate transmission mechanism, factor mobility, and the supplyability, by the inner mechanism of industry structure, corporate structure, financialstructure and balance of payments structure path, and finally reflect on the differencesof output and prices in the regions. Followed by theoretical analysis, we use a VAR model to have an empirical test on the regional output and price effect of the interestrate policy in the three economic circles, and further test the inner mechanism of theregional effects of interest rate policy in our country by building a panel regressionmodel. Finally, we come to the main conclusions: the imbalances of the regionaleconomic and financial development and binary characteristics are the practicalreasons of the regional effects of interest rate policy; the differences of interest ratetransmission mechanism, factor mobility, and the supply ability are the essentialreasons of the regional effects of interest rate policy; The regional effect of interestrate policy in China do exist, the Pearl River Delta economic circle’s output effect ofinterest rate policy is most obvious, but the three major economic circles’ regionaleffects are not significant. We offer recommendations to narrow the regional effects ofthe interest rate policy based on the research at the end of this paper, and point out thedirections for further researching.