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Monetary policy transmission and policy coordination in China

Author

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  • Das, Sonali
  • Song, Wenting

Abstract

We study the transmission of conventional monetary policy in China, focusing on the interaction between monetary and fiscal policy given the unique institutional set-up for macroeconomic policy making. Our results suggest some progress but also continued difficulties in the transmission of monetary policy. Similar to recent studies, we find evidence of monetary policy pass-through to interest rates. However, the impact of monetary policy measures that are not coordinated with fiscal policy is significantly weaker than that of coordinated measures. This suggests the need for further improvements to the interest-rate based framework.

Suggested Citation

  • Das, Sonali & Song, Wenting, 2023. "Monetary policy transmission and policy coordination in China," China Economic Review, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:chieco:v:82:y:2023:i:c:s1043951x23001177
    DOI: 10.1016/j.chieco.2023.102032
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    Cited by:

    1. Funke, Michael & Li, Xiang & Zhong, Doudou, 2023. "Household indebtedness, financial frictions and the transmission of monetary policy to consumption: Evidence from China," Emerging Markets Review, Elsevier, vol. 55(C).
    2. Huang, Yiping & Li, Xiang & Qiu, Han & Yu, Changhua, 2023. "BigTech credit and monetary policy transmission: Micro-level evidence from China," IWH Discussion Papers 18/2022, Halle Institute for Economic Research (IWH), revised 2023.

    More about this item

    Keywords

    Monetary policy; Monetary fiscal coordination; Textual analysis; China;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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