Study on the Effect of China's Financial Conditions Index on Monetary Policy Mechanism
DOI:
https://doi.org/10.71222/hkpb5k85Keywords:
monetary policy, financial conditions index, empirical analysis, transmission mechanism, economic regulationAbstract
This study examines the role and impact of the financial conditions index (FCI) in the transmission of monetary policy within China’s financial market. By analyzing the theoretical foundations and construction methods of the FCI in both domestic and international contexts, and incorporating classical models of monetary policy transmission, this research establishes an analytical framework suited to China’s economic environment. Through empirical analysis, it investigates how the FCI influences the effectiveness of monetary policy, highlighting its varying effects across different regions and time periods, as well as its implications for economic regulation. The findings suggest that the FCI not only reflects the transmission effects of monetary policy but also helps identify structural issues in policy implementation. Based on these insights, the study proposes policy recommendations aimed at optimizing the monetary policy toolkit and strengthening financial market monitoring, ultimately enhancing the effectiveness of monetary policy execution in China while providing both theoretical and practical guidance.
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