Monetary Policy and Credit in China: A Theoretical Analysis
AbstractA three-sector macro model of the Chinese economy is developed in which the activity of state-owned enterprises (SOEs) is constrained by the state-imposed credit plan for working capital. Our analysis indicates the weaknesses of credit control and nominal interest rate increases as tools for holding down the price level; but the hardening of SOEsâ budget constraints is found to be an effective device. The existence of credit and currency controls tends to make devaluation contractionary. Because of general equilibrium repercussions, policies that boost industrial exports tend to reduce welfare in the agricultural sector, where poverty is concentrated.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Macroeconomics.
Volume (Year): 23 (2001)
Issue (Month): 2 (April)
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Web page: http://www.elsevier.com/locate/inca/622617
Other versions of this item:
- Dixon, Huw David, 1998. "Monetary Policy and Credit in China: A Theoretical Analysis," CEPR Discussion Papers 1906, C.E.P.R. Discussion Papers.
- Huw D. Dixon & John Bennett, . "Monetary Policy and Credit in China: a Theoretical Analysis," Discussion Papers 98/17, Department of Economics, University of York.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
- P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
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