Monetary Policy and Credit in China: A Theoretical Analysis
AbstractA three-sector macromodel of China’s 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 weakness of credit control and interest rate variation as anti-inflationary tools. In contrast, the hardening of SOEs’ budget constraints is an effective device. The existence of credit and currency controls tends to make devaluation contractionary. Furthermore, because of general equilibrium repercussions, policies that boost industrial exports tend to reduce welfare in rural areas, 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:
- Huw D. Dixon & John Bennett, . "Monetary Policy and Credit in China: a Theoretical Analysis," Discussion Papers 98/17, Department of Economics, University of York.
- Dixon, Huw David, 1998. "Monetary Policy and Credit in China: A Theoretical Analysis," CEPR Discussion Papers 1906, C.E.P.R. Discussion Papers.
- 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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