IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v161y2026ics0264999326001574.html

Combating crises and deflation: China's monetary policy from financial liberalization through the pandemic

Author

Listed:
  • Burdekin, Richard C.K.
  • Siklos, Pierre L.

Abstract

This paper assesses the extent to which People's Bank of China (PBoC) monetary policy conforms with Taylor and McCallum type policy rules as well as a broader composite rule. Most prior literature has adopted versions of the Taylor rule with less focus on other alternatives. Our estimation over 2001-2023 quarterly data suggests that PBoC policy is responsive to the gap between target and actual nominal GDP in the McCallum rule, as well as the output and inflation gaps in the Taylor rule. While we find that PBoC monetary policy can be reasonably well described under each of these rules, our composite rule offers a better description of PBoC policy. The implied PBoC policy reactions persist across a series of transitions between high- and low-volatility regimes identified via Markov-switching regressions. Our findings support a focus on overall monetary conditions rather than interest rates or money supply growth alone.

Suggested Citation

  • Burdekin, Richard C.K. & Siklos, Pierre L., 2026. "Combating crises and deflation: China's monetary policy from financial liberalization through the pandemic," Economic Modelling, Elsevier, vol. 161(C).
    • Handle: RePEc:eee:ecmode:v:161:y:2026:i:c:s0264999326001574
    DOI: 10.1016/j.econmod.2026.107628
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999326001574
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2026.107628?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:161:y:2026:i:c:s0264999326001574. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.