Different Effects of Monetary Policy in Northwest China: An Empirical Study

There is contradiction between unified monetary policy and lopsided development of regional finance, which will impact on the effects of monetary policy. The regional effect caused by monetary policy will intensify the incongruity of regional economic development. Based on Panel Data model and VAR model, this paper analyzes the long-term and short-term regional effects of monetary policy in the north-western regions. We find that there exists regional difference in the monetary policy effects caused by the difference of monetary policy transmission medium in many aspects, such as dimension, structure and economic environment. According to related theories and conclusion of empirical research, This paper puts forward the suggestions that it would be useful for coordinating northwestern economic development to relax the limits of authority of regional mechanism to carry out monetary policy flexibly and it would replenish the finical system to make favorable policy to attract and encourage developing non-state-owned small and medium-sized finical institution.