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The Independent Monetary Policy under the Fixed Exchange Regime

Author

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  • Gang Gong

    (Tsinghua University, Beijing, China)

  • Jian Gao

    (China Development Bank, China)

Abstract

Using a macro-econometric model that is specified for the current Chinese economy, we investigate the performance of monetary policy in China with the assumption (which anyway will occur in the near future) that capital market was opened. Our purpose is to find how the monetary authority should response to a variety of external shocks by applying different policy tools (including required reserve ratio, buying and selling foreign exchange, the open market operation, the discount rate among others) while keeping the exchange rate within a designed regime. The Monte Carlo simulation will be used to evaluate the effectiveness of such policy reactions.

Suggested Citation

  • Gang Gong & Jian Gao, 2006. "The Independent Monetary Policy under the Fixed Exchange Regime," Computing in Economics and Finance 2006 517, Society for Computational Economics.
    • Handle: RePEc:sce:scecfa:517
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    File URL: http://repec.org/sce2006/up.25478.1142222756.pdf
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    References listed on IDEAS

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