Market and non-market monetary policy tools in a calibrated DSGE model for mainland China

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Title: Market and non-market monetary policy tools in a calibrated DSGE model for mainland China
Author: Chen, Qianying ; Funke, Michael ; Paetz, Michael
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 16/2012
Year of publication: 2012
Publication date: 17.7.2012
Pages: 32 s.
Keywords: rahapolitiikka; välineet; makrotalous; Kiina; mallit; Bofit-kokoelma; DSGE
Abstract: Monetary policy in mainland China differs from conventional central banking in several respects. The central bank regulates retail lending and deposit rates, influences the credit supply via window guidance, and, in recent years has even used the required reserve ratio as a tool for fine-tuning monetary policy. This paper develops a New Keynesian DSGE model to captures China s unconventional monetary policy toolkit. We find that credit quotas are important as the interest-rate corridor distorts the efficient reactions of the economy. Moreover, for China s central bankers the choice of a particular monetary policy tool or a the appropriate combination of instruments depends on the source of the shock.
Rights: https://helda.helsinki.fi/bof/copyright


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