Financial system reforms and China's monetary policy framework : A DSGE-based assessment of initiatives and proposals

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Title: Financial system reforms and China's monetary policy framework : A DSGE-based assessment of initiatives and proposals
Author: Funke, Michael ; Paetz, Michael
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 30/2012
Year of publication: 2012
Publication date: 11.12.2012
Pages: 36 s.
Keywords: rahoitusjärjestelmät; Kiina; talousuudistus; rahapolitiikka; mallit; rahoitusmarkkinat; uudistukset; rahoituslaitokset; pankkitoiminta; Bofit-kokoelma; DSGE
JEL: E42; E52; E58
Abstract: This paper evaluates various financial system reform initiatives and proposals in China in a DSGE modelling setting. The key reform steps analysed include phasing out benchmark interest rates, deepening the direct finance market, reducing government's quantity-based intervention on financial institutions. Our counterfactual model simulation results suggest that the reforms will be beneficial only, if Chinese monetary policy continues to rely on quantity-based interventions on financial institutions or tightens the interest rate rule. Keywords: DSGE model, financial sector reform, monetary policy, China. JEL classification: E42, E52, E58.
Rights: https://helda.helsinki.fi/bof/copyright


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