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Author/Editor:
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Laurens, Bernard ; Maino, Rodolfo
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Publication Date:
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January 01, 2007
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Electronic Access:
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Free Full text
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
The People's Bank of China (PBC) has made great strides in modernizing its monetary policy frameworks but their effectiveness will diminish as the sophistication of the economy increases. Empirical evidence supports maintaining a reference to money in China's monetary strategy and enhancing the role of interest rates in its conduct. We advocate adoption of an eclectic strategy involving the monitoring of several indicators, and of a short-term interest rate as the operational target. The PBC should be granted discretion to change its policy rate, and there are no technical obstacles for such a move to occur in the near future.
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Series:
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Working Paper No. 07/14
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Subject(s):
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Monetary policy | China | Monetary policy instruments | Demand for money | Economic indicators | Interest rates | China, People's Republic of
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Author's Keyword(s):
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Monetary policy | money demand | multipliers | monetary policy instruments |
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