The transition of China's monetary policy regime: Before and after the four trillion RMB stimulus

Buben Fu and Bin Wang

Economic Modelling, 2020, vol. 89, issue C, 273-303

Abstract: This paper studies the monetary policy of China in a flexible time-varying parameter vector autoregression model with stochastic volatility, with a focus on the monetary policy regime change around 2009 when the four trillion RMB stimulus started. We find that China has been transiting from targeting money quantity to targeting interest rate since 2009. The interest rate policy instrument played a bigger role in the central bank's monetary policy toolbox. We check an alternative identification strategy and a couple of different model settings to show the robustness of this conclusion.

Keywords: Monetary policy; TVP-VAR-SV; Four trillion RMB stimulus; China (search for similar items in EconPapers)
JEL-codes: C11 C32 E52 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:89:y:2020:i:c:p:273-303

DOI: 10.1016/j.econmod.2019.10.022

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