Market and Non-Market Monetary Policy Tools in a Calibrated DSGE Model for Mainland China

Michael Funke, Michael Paetz and Qianying Chen ()

Quantitative Macroeconomics Working Papers from Hamburg University, Department of Economics

Abstract: Monetary policy in mainland China differs from conventional central bank- ing 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 pol- icy. This paper develops a New Keynesian DSGE model to captures China’s unconventional monetary policy toolkit. We find that credit quotas are impor- tant as the interest-rate corridor distorts the efficient reactions of the economy. Moreover, for China’s central bankers the choice of a particular monetary pol- icy tool or a the appropriate combination of instruments depends on the source of the shock.

Keywords: DSGE models; monetary policy; China; macroprudential policy (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-dge, nep-mac, nep-mon and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Related works:
Working Paper: Market and non-market monetary policy tools in a calibrated DSGE model for mainland China (2012)
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