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From Window Guidance to Interbank Rates: Tracing the Transition of Monetary Policy in Japan and China

Stefan Angrick and Naoyuki Yoshino ()

International Journal of Central Banking, 2020, vol. 16, issue 3, 279-316

Abstract: Japanese monetary policy up to 1991 was based on a mix of price-based and quantity-based instruments and targets. Echoes of this system are today found in Chinese monetary policy. We explore the transition of these two regimes using historical statistics, computational text analysis, and structural vector autoregressive (SVAR) models. Specifically, we examine the role of the interbank rate and "window guidance," a policy by which authorities communicate target quotas for lending growth directly to commercial banks. We empirically demonstrate the declining effectiveness of quantity measures and the increasing importance of price measures and provide recommendations for managing this transition.

JEL-codes: E5 E52 E58 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Working Paper: From window guidance to interbank rates: Tracing the transition of monetary policy in Japan and China (2018) Downloads
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Handle: RePEc:ijc:ijcjou:y:2020:q:2:a:8