Monetary policy, asset prices and the real economy in China

James Laurenceson and Ceara Hui

No 427, Discussion Papers Series from University of Queensland, School of Economics

Abstract: The Global Financial Crisis served to refocus attention on the potential for monetary policy to exert an impact on asset prices. In turn, asset price fluctuations were shown to exert a powerful impact on the real economy. In this paper we consider these linkages in the case of China. Using SVAR modelling techniques, our results indicate that a monetary policy shock has a significant impact on asset prices, particularly share prices, and notably more so than on general goods and services prices. However, a shock to asset prices has little impact on the real economy. Policy implications are discussed.

Date: 2011
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:qld:uq2004:427

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