Time-varying transmission efficiency of China’s monetary policy

Tingting Ge

China Economic Journal, 2019, vol. 12, issue 1, 32-51

Abstract: This paper tries to investigate the time-varying characteristics of China’s monetary policy transmission from the impulse response evidence of both open-economy DSGE model and TVP-VAR model. We find that the transmission efficiency of price-based monetary policy has significantly improved over the sample period, while quantity-based monetary policy is weakening. The resume of exchange reform in 2010 also strengthens the exchange rate channel especially in terms of price-based monetary policy. Combining with the evidence from DSGE model underlines the importance of further interest rate liberalization and price-based monetary policy Taylor rule should also consider the exchange rate stability.

Date: 2019
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DOI: 10.1080/17538963.2018.1556421

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