The Independent Monetary Policy under the Fixed Exchange Regime

Gang Gong () and Jian Gao
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Gang Gong: Tsinghua University, Beijing, China
Jian Gao: China Development Bank, China

No 517, Computing in Economics and Finance 2006 from Society for Computational Economics

Abstract: Using a macro-econometric model that is specified for the current Chinese economy, we investigate the performance of monetary policy in China with the assumption (which anyway will occur in the near future) that capital market was opened. Our purpose is to find how the monetary authority should response to a variety of external shocks by applying different policy tools (including required reserve ratio, buying and selling foreign exchange, the open market operation, the discount rate among others) while keeping the exchange rate within a designed regime. The Monte Carlo simulation will be used to evaluate the effectiveness of such policy reactions.

Date: 2006-07-04
New Economics Papers: this item is included in nep-cba, nep-fmk, nep-ifn, nep-mac and nep-mon
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