Inflation-targeting under a Managed Exchange Rate: the Case of the Chinese Central Bank

Meixing Dai ()

Journal of Chinese Economic and Business Studies, 2006, vol. 4, issue 3, 199-219

Abstract: In 2004, the People's Bank of China (PBC) is reported to have abandoned the quantity of money as its intermediate goal and to adopt some elements of the apparatus of inflation targeting, without giving up the managed exchange rate regime for the renminbi (RMB), the Chinese currency. We show in this paper, using a dynamic setting, that partially implementing the apparatus of inflation targeting by the PBC to improve the performance of monetary policy encounters various difficulties from out-of-equilibrium dynamics to macro-economic and financial instability. In this context, some macro-economic measures can be helpful for reducing disequilibrium. Further development of internal monetary and financial markets and assigning balanced weights by the PBC to inflation and output targets are necessary conditions for the regime to be stable.

Keywords: Inflation targeting; renminbi (RMB); managed exchange rate; macro-economic and financial instability; JEL C LASSIFICATION : E52; E58; F41 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/14765280600995579 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Inflation-Targeting under a Managed Exchange Rate: The Case of the Chinese Central Bank (2006)
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:taf:jocebs:v:4:y:2006:i:3:p:199-219

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RCEA20

DOI: 10.1080/14765280600995579

Access Statistics for this article

Journal of Chinese Economic and Business Studies is currently edited by Professor Xiaming Liu

More articles in Journal of Chinese Economic and Business Studies from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().