A Study of Coordinating China’s Two-Pillar Regulatory Policy under the Shock of the Fed’s Interest Rate Hike—From the Perspective of “Stable Growth” and “Risk Prevention”

Yi Yuhuan and Pan Min ()
Additional contact information
Yi Yuhuan: College of Finance and Statistics, Hunan University, Changsha, China
Pan Min: College of Finance and Statistics, Hunan University, Professor of the Economics and Management School of Wuhan University. Changsha, China

China Finance and Economic Review, 2023, vol. 12, issue 1, 24-47

Abstract: Domestic asset price fluctuations triggered by the impact of the Fed’s interest rate hike may lead to a spiral of mutual feedback between fluctuations in real economy and systematic risks of the financial sector. By constructing a DSGE model of small-scale open economy including cross-border capital flows and supply-demand financial frictions, this paper describes the negative feedback mechanism formed by the interplay between domestic real-economy fluctuations and financial risks on both supply and demand sides under the impact of Fed’s interest rate hike, and studies how to coordinate monetary policy and macroprudential policies under the goals of maintaining stable growth and preventing risks.

Keywords: Fed’s monetary policy; two-pillar regulatory policy; financial frictions on supply and demand sides; DSGE model (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/cfer-2023-0002 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:cferev:v:12:y:2023:i:1:p:24-47:n:3

DOI: 10.1515/cfer-2023-0002

Access Statistics for this article

China Finance and Economic Review is currently edited by He Dexu

More articles in China Finance and Economic Review from De Gruyter
Bibliographic data for series maintained by Peter Golla ().