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Examining the role of monetary aggregates in China

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  • Sánchez-Fung, José R.

Abstract

The paper examines the relative significance of monetary aggregates and interest rates in China using the information approach to monetary policy. The analysis reveals the superiority and robustness of a narrow monetary aggregate in contributing information about future movements in inflation. JEL classification: E52. Keywords: monetary policy and inflation; information approach; monetary aggregates; interest rates; China

Suggested Citation

  • Sánchez-Fung, José R., 2012. "Examining the role of monetary aggregates in China," BOFIT Discussion Papers 18/2012, Bank of Finland, Institute for Economies in Transition.
  • Handle: RePEc:bof:bofitp:2012_018
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    References listed on IDEAS

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    1. Kareken, John H & Muench, Thomas & Wallace, Neil, 1973. "Optimal Open Market Strategy: The Use of Information Variables," American Economic Review, American Economic Association, vol. 63(1), pages 156-172, March.
    2. McCallum, Bennett T. & Nelson, Edward, 2010. "Money and Inflation: Some Critical Issues," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 3, pages 97-153, Elsevier.
    3. Michael Woodford, 2008. "How Important Is Money in the Conduct of Monetary Policy?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(8), pages 1561-1598, December.
    4. Estrella, Arturo & Mishkin, Frederic S., 1997. "Is there a role for monetary aggregates in the conduct of monetary policy?," Journal of Monetary Economics, Elsevier, vol. 40(2), pages 279-304, October.
    5. Marvin Goodfriend & Eswar Prasad, 2009. "A Framework for Independent Monetary Policy in China," Chapters, in: Gill Hammond & Ravi Kanbur & Eswar Prasad (ed.), Monetary Policy Frameworks for Emerging Markets, chapter 8, Edward Elgar Publishing.
    6. Friedman, Benjamin M & Kuttner, Kenneth N, 1992. "Money, Income, Prices, and Interest Rates," American Economic Review, American Economic Association, vol. 82(3), pages 472-492, June.
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    Cited by:

    1. repec:bof:bofitp:urn:nbn:fi:bof-201505201211 is not listed on IDEAS
    2. Fu, Buben & Wang, Bin, 2020. "The transition of China's monetary policy regime: Before and after the four trillion RMB stimulus," Economic Modelling, Elsevier, vol. 89(C), pages 273-303.
    3. John A. Tatom, 2017. "Globalization and Inflation: a Swiss Perspective," Open Economies Review, Springer, vol. 28(3), pages 523-545, July.

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    More about this item

    Keywords

    monetary policy and inflation; information approach; monetary aggregates; interest rates; china;
    All these keywords.

    JEL classification:

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

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