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Financial system reforms and China’s monetary policy framework: A DSGE-based assessment of initiatives and proposals

  • Funke , Michael

    ()

    (BOFIT)

  • Paetz , Michael

    ()

    (BOFIT)

This paper evaluates various financial system reform initiatives and proposals in China in a DSGE modelling setting. The key reform steps analysed include phasing out benchmark interest rates, deepening the direct finance market, reducing government’s quantity-based intervention on financial institutions. Our counterfactual model simulation results suggest that the reforms will be beneficial only, if Chinese monetary policy continues to rely on quantity-based interventions on financial institutions or tightens the interest rate rule.

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File URL: http://www.suomenpankki.fi/bofit/tutkimus/tutkimusjulkaisut/dp/Documents/2012/dp3012.pdf
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Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 30/2012.

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Length: 36 pages
Date of creation: 11 Dec 2012
Date of revision:
Handle: RePEc:hhs:bofitp:2012_030
Contact details of provider: Postal:
Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland

Phone: + 358 10 831 2268
Fax: + 358 10 831 2294
Web page: http://www.suomenpankki.fi/bofit_en/
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  1. Reinhart, Carmen M. & Rogoff, Kenneth S., 2013. "Banking crises: An equal opportunity menace," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4557-4573.
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  16. Hongyi Chen & Lars Jonung & Olaf Unteroberdoerster, 2009. "Lessons for China from Financial Liberalization in Scandinavia," Working Papers 262009, Hong Kong Institute for Monetary Research.
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  18. Gertler, Mark & Kiyotaki, Nobuhiro, 2010. "Financial Intermediation and Credit Policy in Business Cycle Analysis," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 11, pages 547-599 Elsevier.
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