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Effectiveness of China's Monetary Policy and Reform of Its Foreign Exchange System

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  • Xinhua Gu
  • Lan Zhang

Abstract

This paper examines the effectiveness of China's monetary policy in curbing the overheating and speculation problems under the current foreign exchange system. The paper stresses the necessity of capital controls in China's gradual foreign exchange reform and the importance of credible government policy in guiding market expectations. Also, the paper discusses the persistence of China's external imbalance, and provides policy recommendations for its reduction. (Edited by Zhinan Zhang)

Suggested Citation

  • Xinhua Gu & Lan Zhang, 2006. "Effectiveness of China's Monetary Policy and Reform of Its Foreign Exchange System," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(5), pages 48-64, September.
    • Handle: RePEc:bla:chinae:v:14:y:2006:i:5:p:48-64
    DOI: 10.1111/j.1749-124X.2006.00039.x
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    References listed on IDEAS

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    1. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
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    Cited by:

    1. Yuanquan Chen, 2008. "Chinese Economy and Excess Liquidity," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(5), pages 63-82, September.
    2. Nguyen, Vu Hong Thai & Boateng, Agyenim, 2015. "Bank excess reserves in emerging economies: A critical review and research agenda," International Review of Financial Analysis, Elsevier, vol. 39(C), pages 158-166.

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