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China's monetary policy: Quantity versus price rules

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  • Zhang, Wenlang

Abstract

Two monetary policy rules, the money supply (quantity) rule and interest rate (price) rule, are explored for China in a dynamic stochastic general equilibrium model. The empirical results seem to indicate that the price rule is likely to be more effective in managing the macroeconomy than the quantity rule, favoring the government's intention of liberalizing interest rates and making a more active use of the price instrument. Moreover, the economy would have experienced less fluctuations had interest rate responded more aggressively to inflation.

Suggested Citation

  • Zhang, Wenlang, 2009. "China's monetary policy: Quantity versus price rules," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 473-484, September.
    • Handle: RePEc:eee:jmacro:v:31:y:2009:i:3:p:473-484
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    References listed on IDEAS

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