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Monetary policy rule for China - 1994-2006

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With the development of market-oriented economic reforms, Chinese monetary policy plays an important role in the world. The objective of this paper is to review the recent conduct of Chinese monetary policy and the central bank’s rule-based behavior in period 1994-2006 by estimating the monetary policy rules (monetary policy reaction function). It compares four kinds of monetary policy rules -Taylor rule, McCallum rule, Modified Taylor rule and Modified McCallum rule and conducts the empirical study of these four rules with Chinese data. The findings are that these four estimated rules can describe Chinese monetary policy stance in some degree and Taylor rules are better than McCallum rules in evaluating Chinese monetary policy performance. This study includes five sections. Section 1 is the introduction. Section 2 is the brief literature review. Section 3 indicates four model specifications of monetary policy rule. Section 4 evaluates Chinese monetary policy performance utilizing models mentioned in Section 3. Section 5 provides concluding remarks.

Suggested Citation

  • Danfeng Kong, "undated". "Monetary policy rule for China - 1994-2006," EAERG Discussion Paper Series 1405, School of Economics, University of Queensland, Australia.
  • Handle: RePEc:qld:uqeaer:14
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    File URL: http://www.uq.edu.au/economics/eaerg/dp/EAERG_DP14.pdf
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    Cited by:

    1. BIKAI, J. Landry & MBOHOU M., Moustapha, 2016. "A Reaction Function for the Bank of the Central African States in a Context of Fiscal Dominance," MPRA Paper 89108, University Library of Munich, Germany.
    2. Petreski, Marjan & Jovanovic, Branimir, 2012. "New Approach to Analyzing Monetary Policy in China," MPRA Paper 40497, University Library of Munich, Germany.

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