Chinese monetary policy and the dollar peg
AbstractThis paper investigates to what extent Chinese monetary policy is constrained by the dollar peg. To this end, we use a cointegration framework to examine whether Chinese interest rates are driven by the Fed's policy. In a second step, we estimate a monetary model for China, in which we include also other monetary policy tools besides the central bank interest rate, namely reserve requirement ratios and open market operations. Our results suggest China has been relatively successful in isolating its monetary policy from the US policy and that the interest rate tool has not been effectively made use of. We therefore conclude that by employing capital controls and relying on other instruments than the interest rate China has been able to exert relatively autonomous monetary policy. --
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Bibliographic InfoPaper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2010/35.
Date of creation: 2010
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Chinese monetary policy; monetary independence; cointegration;
Other versions of this item:
- Volz, Ulrich & Reade, J. James, 2011. "Chinese Monetary Policy and the Dollar Peg," Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48740, Verein für Socialpolitik / German Economic Association.
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-05 (All new papers)
- NEP-CBA-2011-02-05 (Central Banking)
- NEP-IFN-2011-02-05 (International Finance)
- NEP-MON-2011-02-05 (Monetary Economics)
- NEP-TRA-2011-02-05 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Chinese inflation, monetary policy and the dollar peg
by Guest Author in credit writedowns on 2011-02-18 13:20:00
- China und die G20
by Ulrich Volz in Ökonomenstimme on 2011-03-08 12:00:00
- Bonatti, Luigi & Fracasso, Andrea, 2013. "Hoarding of international reserves in China: Mercantilism, domestic consumption and US monetary policy," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 1044-1078.
- Kristina Spantig, 2012. "International monetary policy spillovers in an asymmetric world monetary system - The United States and China," Global Financial Markets Working Paper Series 2012-33, Friedrich-Schiller-University Jena.
- Körner, Finn Marten & Ehnts, Dirk H., 2013. "Chinese monetary policy – from theory to practice," MPRA Paper 44264, University Library of Munich, Germany.
- J. James Reade & Ulrich Volz, 2011. "From the General to the Specific," Discussion Papers 11-18, Department of Economics, University of Birmingham.
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- Ito, Hiro & Volz, Ulrich, 2012. "The People’s Republic of China and Global Imbalances from a View of Sectorial Reforms," ADBI Working Papers 393, Asian Development Bank Institute.
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