Monetary Policy Transmission and Policy Coordination in China

Sonali Das and Wenting Song

No 2022/074, IMF Working Papers from International Monetary Fund

Abstract: We study the transmission of conventional monetary policy in China, focusing on the interaction between monetary and fiscal policy given the unique institutional set-up for macroeconomic policy making. Our results suggest some progress but also continued difficulties in the transmission of monetary policy. Similar to recent studies, we find evidence of monetary policy pass-through to interest rates. However, the impact of monetary policy measures that are not coordinated with fiscal policy is significantly weaker than that of coordinated measures. This suggests the need for further improvements to the interest-rate based framework.

Keywords: monetary policy; monetary fiscal coordination; textual analysis; China; monetary policy transmission; monetary policy measure; monetary policy pass-through; pass-through to interest rates; monetary policy shock; fiscal policy measure; Yield curve; Central bank policy rate; Monetary policy instruments; Deposit rates (search for similar items in EconPapers)
Pages: 40
Date: 2022-04-29
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cna, nep-mac and nep-mon
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Citations: View citations in EconPapers (8)

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Journal Article: Monetary policy transmission and policy coordination in China (2023)
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