Study on time-variant effects of China's bank lending channel of monetary policy

The monetary policy not only aims to boost the economic growth,but to keep the inflation under control.This paper,by making use of Markov Regime-Switching Vector Autoregressive model,examines the effects of Chinas bank lending channel on the economic growth and inflation level from Jan,2006-Dec,2010.The results show that the effects of monetary policy on economic growth and inflation are time-variant;the regime-switching is closely related to the term structure of loan.When the monetary policy is in period of contraction,the medium and long-term loan takes on a faster growth than short-term loan,which will boost the economic growth by having insignifi-cant effects on inflation;Instead,when the monetary policy is in period of expansion,the short-term loan grows much faster which will reduce to less driving force on eco-nomic growth but higher pressure of inflation.