Monetary policy transmission in China: A DSGE model with parallel shadow banking and interest rate control
Petar Mihaylovski and
No 9/2015, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition
The paper sheds light on the interplay between monetary policy, the commercial banking sector and the shadow banking sector in mainland China by means of a nonlinear stochastic general equilibrium (DSGE) model with occasionally binding constraints. In particular, we analyze the impacts of interest rate liberalization on monetary policy transmission as well as the dynamics of the parallel shadow banking sector. Comparison of various interest rate liberalization scenarios reveals that monetary policy results in increased feed-through to the lending and investment under complete liberalization. Furthermore, tighter regulation of interest rates in the commercial banking sector in China leads to an increase in loans provided by the shadow banking sector.
JEL-codes: E32 E42 E52 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-dge, nep-mac and nep-mon
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Working Paper: Monetary Policy Transmission in China: A DSGE Model with Parallel Shadow Banking and Interest Rate Control (2015)
Working Paper: Monetary policy transmission in China: A DSGE model with parallel shadow banking and interest rate control
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Persistent link: https://EconPapers.repec.org/RePEc:bof:bofitp:2015_009
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