China's monetary policy: Quantity versus price rules

Wenlang Zhang

Journal of Macroeconomics, 2009, vol. 31, issue 3, 473-484

Abstract: Two monetary policy rules, the money supply (quantity) rule and interest rate (price) rule, are explored for China in a dynamic stochastic general equilibrium model. The empirical results seem to indicate that the price rule is likely to be more effective in managing the macroeconomy than the quantity rule, favoring the government's intention of liberalizing interest rates and making a more active use of the price instrument. Moreover, the economy would have experienced less fluctuations had interest rate responded more aggressively to inflation.

Keywords: Monetary; policy; rules; DSGE; model; Taylor; rule (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (67)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:31:y:2009:i:3:p:473-484

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