Making rule of money policy and its effects on economy in China
Since the economic reform in China, the central bank of China tries to regulate money supply and deposit and lending interest rates to achieve the goal of stabilizing commodity prices and stimulating economic development. With the data during the period from 1992 to 2006, time-varying models of Taylor rule and McCallum rule are introduced and are used to discuss the reaction of money policy variables represented by money supply M1 and the average of lending and deposit interest rates to economic variables with inflation rate and output gap as representatives. It is found that the reaction of the official interest rate to inflation rate is quite small, is negative sometimes, and is not consistent with Taylor rule. But the reaction to output gap is significantly positive, and show strongly curbing real economic growth during the period from 1996 to 1999. Before 1994, money supply is not consistent with McCallum rule, overdue growth of money supply is a cause of economic overheating afterwards. Money supply is consistent with McCallum rule after 1994. But the reaction of money supply changes with time, during the time of big positive output gap, the reaction of money supply to output gap is not so strong as the reaction of money supply during the time of negative output gap. The empirical results of effects of money policy on economic variables indicate that increase of money supply causes increase of output immediately and increase of inflation rate afterwards. But the interest rate does not have significant effect on the two economic variables.
deposit and lending interest rate money supply output gap inflation rate
范龙振 张处
复旦大学管理学院,上海200433 香港科技大学财务学系,香港
国际会议
成都
英文
2007-07-09（万方平台首次上网日期，不代表论文的发表时间）