China will shift its monetary policy stance from relatively loose to prudent next year,the Political Bureau of the Communist Party of China(CPC) Central Committee decided Friday. The meeting,chaired by President Hu Ji...China will shift its monetary policy stance from relatively loose to prudent next year,the Political Bureau of the Communist Party of China(CPC) Central Committee decided Friday. The meeting,chaired by President Hu Jintao,also展开更多
This study examines the relationship between inflation rate and reserve requirement ratio in China. Our findings show that there is a long-term relationship between reserve requirement ratio and inflation rate. In the...This study examines the relationship between inflation rate and reserve requirement ratio in China. Our findings show that there is a long-term relationship between reserve requirement ratio and inflation rate. In the short-run, the central bank adjusts the reserve requirement ratio upwards faster than they adjust them downwards. The asymmetric adjustment reflects the fact the Chinese economy was overheating over the past few years as a result of the stimulus package implemented after the onset of the global financial crisis and inflation was threatening the stability of the society.展开更多
This paper examines the effectiveness of China＇s monetary policy in curbing the overheating and speculation problems under the current foreign exchange system. The paper stresses the necessity of capital controls in ...This paper examines the effectiveness of China＇s monetary policy in curbing the overheating and speculation problems under the current foreign exchange system. The paper stresses the necessity of capital controls in China＇s gradual foreign exchange reform and the importance of credible government policy in guiding market expectations. Also, the paper discusses the persistence of China＇s external imbalance, and provides policy recommendations for its reduction.展开更多
The asymmetric and segmented causality between the monetary policy and real estate market in China is crucial but remains mystery.With the application of quantile causality test,this article investigates nonlinear de...The asymmetric and segmented causality between the monetary policy and real estate market in China is crucial but remains mystery.With the application of quantile causality test,this article investigates nonlinear dependence between property prices and money supply.Our results show that the tail causality exists in many cities in China.Moreover,we find that small-sized cities and inland cities are more sensitive to the broad money(M2)changes when the housing market return is in the tail quantile intervals.These findings can help the Chinese government formulate appropriate monetary policies regarding their implications in the real estate market.展开更多
In the present paper, we model the policy stance of the People＇s Bank of China （PBC） as a latent variable, and the discrete changes in the reserve requirement ratio, policy interest rates, and the scale of open mar...In the present paper, we model the policy stance of the People＇s Bank of China （PBC） as a latent variable, and the discrete changes in the reserve requirement ratio, policy interest rates, and the scale of open market operations are taken as signals of movement of this latent variable. We run a discrete choice regression that relates these observed indicators of policy stance to major trends of macroeconomic and financial developments, which are represented by common factors extracted from a large number of variables. The predicted value of the estimated model can then be interpreted as the implicit policy stance of the PBC. In a second step, we estimate how much of the variation in the PBC＇ s implicit stance can be explained by measures of its policy objectives on inflation, growth and financial stability. We find that deviations of CPI inflation from an implicit target and deviations of broad money growth from the announced targets, but not output gaps, figure significantly in the PBC＇s policy changes.展开更多
In the past decade Chinese inflation was not high on average, but it was quite volatile. Back in the 1980s and 1990s, high inflation was a very real problem. What explains the inflationary dynamics in China？ In parti...In the past decade Chinese inflation was not high on average, but it was quite volatile. Back in the 1980s and 1990s, high inflation was a very real problem. What explains the inflationary dynamics in China？ In particular, does monetary policy account for the substantial run-ups of inflation, followed by the equally substantial dis-inflation？ In the absence of commitment technologies, the monetary authorities may create surprise inflation to achieve higher growth, while private agents would anticipate that and adjust their decisions accordingly, leading to accelerated inflation without a real impact. Do these types of simple time-inconsistency models of monetary policy explain the dynamic pattern of inflation in China？ I show that the long-run and short-run restrictions imposed by discretionary policy, when the time-inconsistent policymaker has a desire to push output above potential, are largely rejected by the data. The estimates of the inflation bias under discretion when the policymaker is asymmetrically averse to recessions are not statistically significant either. The analysis contributes to the understanding of Chinese monetary policy and its inflationary implications and also points to the need of further investigation of inflationary behavior during the economic transition.展开更多
The prudent monetary policy with Chinese characteristics has taken shape step by step since the beginning of 1998. The background for the formation of the policy was: (1) financial risk problem was extraordinarily out...The prudent monetary policy with Chinese characteristics has taken shape step by step since the beginning of 1998. The background for the formation of the policy was: (1) financial risk problem was extraordinarily outstanding and the pressing task at the time was to prevent and reduce financial risks; (2) a turning-point change occurred in the market supply and demand, with structural conflicts becoming the main contradictions and the effective demand for loans was inadequate; (3) a proactive fiscal policy was implemented, with the central finance issuing bonds to commercial banks, which meant the use of monetary policy to sustain展开更多
In this paper,we review the historical transformation of China’s monetary policy framework in a systematical way in the past 70 years since the founding of the People’s Republic of China,from the five dimensions of ...In this paper,we review the historical transformation of China’s monetary policy framework in a systematical way in the past 70 years since the founding of the People’s Republic of China,from the five dimensions of money creation mechanism,monetary policy objective,monetary policy instrument,monetary policy rule and monetary policy transmission channel.We then focus on the current policy framework and suggest its major characteristics:the base money creation mechanism is undergoing fundamental structural changes and the credit system is becoming more and more complex;the multip1e objectives of the monetary policy are prone to conflict with each other;quantitative tools and price-based tools coexist while the validity of various new structural tools still needs to be tested;the monetary policy decisions are mainly discretionary and clear quantitative rules have not been formed;the monetary policy transmission is still dominated by bank credit channels,and the transmission to real economy is partially blocked.In the end,we outline the four major challenges facing China’s existing monetary policy framework and put forward policy recommendations for its transformation in the future.展开更多
文摘China will shift its monetary policy stance from relatively loose to prudent next year,the Political Bureau of the Communist Party of China(CPC) Central Committee decided Friday. The meeting,chaired by President Hu Jintao,also
文摘This study examines the relationship between inflation rate and reserve requirement ratio in China. Our findings show that there is a long-term relationship between reserve requirement ratio and inflation rate. In the short-run, the central bank adjusts the reserve requirement ratio upwards faster than they adjust them downwards. The asymmetric adjustment reflects the fact the Chinese economy was overheating over the past few years as a result of the stimulus package implemented after the onset of the global financial crisis and inflation was threatening the stability of the society.
文摘This paper examines the effectiveness of China＇s monetary policy in curbing the overheating and speculation problems under the current foreign exchange system. The paper stresses the necessity of capital controls in China＇s gradual foreign exchange reform and the importance of credible government policy in guiding market expectations. Also, the paper discusses the persistence of China＇s external imbalance, and provides policy recommendations for its reduction.
基金Haoyuan Ding acknowledges the financial support from the National Natural Science Foundation of China[No.71703086]the financial support from Shanghai Institute of International Finance and Economics and the financial support from the Program for Innovative Research Team of Shanghai University of Finance and Economics.All remaining errors are our own.
文摘The asymmetric and segmented causality between the monetary policy and real estate market in China is crucial but remains mystery.With the application of quantile causality test,this article investigates nonlinear dependence between property prices and money supply.Our results show that the tail causality exists in many cities in China.Moreover,we find that small-sized cities and inland cities are more sensitive to the broad money(M2)changes when the housing market return is in the tail quantile intervals.These findings can help the Chinese government formulate appropriate monetary policies regarding their implications in the real estate market.
文摘In the present paper, we model the policy stance of the People＇s Bank of China （PBC） as a latent variable, and the discrete changes in the reserve requirement ratio, policy interest rates, and the scale of open market operations are taken as signals of movement of this latent variable. We run a discrete choice regression that relates these observed indicators of policy stance to major trends of macroeconomic and financial developments, which are represented by common factors extracted from a large number of variables. The predicted value of the estimated model can then be interpreted as the implicit policy stance of the PBC. In a second step, we estimate how much of the variation in the PBC＇ s implicit stance can be explained by measures of its policy objectives on inflation, growth and financial stability. We find that deviations of CPI inflation from an implicit target and deviations of broad money growth from the announced targets, but not output gaps, figure significantly in the PBC＇s policy changes.
文摘In the past decade Chinese inflation was not high on average, but it was quite volatile. Back in the 1980s and 1990s, high inflation was a very real problem. What explains the inflationary dynamics in China？ In particular, does monetary policy account for the substantial run-ups of inflation, followed by the equally substantial dis-inflation？ In the absence of commitment technologies, the monetary authorities may create surprise inflation to achieve higher growth, while private agents would anticipate that and adjust their decisions accordingly, leading to accelerated inflation without a real impact. Do these types of simple time-inconsistency models of monetary policy explain the dynamic pattern of inflation in China？ I show that the long-run and short-run restrictions imposed by discretionary policy, when the time-inconsistent policymaker has a desire to push output above potential, are largely rejected by the data. The estimates of the inflation bias under discretion when the policymaker is asymmetrically averse to recessions are not statistically significant either. The analysis contributes to the understanding of Chinese monetary policy and its inflationary implications and also points to the need of further investigation of inflationary behavior during the economic transition.
文摘The prudent monetary policy with Chinese characteristics has taken shape step by step since the beginning of 1998. The background for the formation of the policy was: (1) financial risk problem was extraordinarily outstanding and the pressing task at the time was to prevent and reduce financial risks; (2) a turning-point change occurred in the market supply and demand, with structural conflicts becoming the main contradictions and the effective demand for loans was inadequate; (3) a proactive fiscal policy was implemented, with the central finance issuing bonds to commercial banks, which meant the use of monetary policy to sustain
基金The Youth Program of the National Social Science Fund of China“Study on the Forming Mechanism and Countermeasures for Macro Debt and High Leverage”(17CJY054).
文摘In this paper,we review the historical transformation of China’s monetary policy framework in a systematical way in the past 70 years since the founding of the People’s Republic of China,from the five dimensions of money creation mechanism,monetary policy objective,monetary policy instrument,monetary policy rule and monetary policy transmission channel.We then focus on the current policy framework and suggest its major characteristics:the base money creation mechanism is undergoing fundamental structural changes and the credit system is becoming more and more complex;the multip1e objectives of the monetary policy are prone to conflict with each other;quantitative tools and price-based tools coexist while the validity of various new structural tools still needs to be tested;the monetary policy decisions are mainly discretionary and clear quantitative rules have not been formed;the monetary policy transmission is still dominated by bank credit channels,and the transmission to real economy is partially blocked.In the end,we outline the four major challenges facing China’s existing monetary policy framework and put forward policy recommendations for its transformation in the future.
