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 SOEs’ 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 InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 98/17.
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Other versions of this item:
- Bennett, John & David Dixon, Huw, 2001. "Monetary Policy and Credit in China: A Theoretical Analysis," Journal of Macroeconomics, Elsevier, vol. 23(2), pages 297-314, April.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-04-13 (All new papers)
- NEP-IFN-1999-04-13 (International Finance)
- NEP-MON-1999-04-13 (Monetary Economics)
- NEP-PBE-1999-04-13 (Public Economics)
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