A <scp>DSGE</scp> Analysis of Asymmetric Monetary Policy Transmission in China

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.