Monetary Policy Transmission and Policy Coordination in China

IMF Working Papers, April 29, 2022

Source details

Canonical URL

Monetary Policy Transmission and Policy Coordination in China

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Sonali Das, Wenting Song
• Published: April 29, 2022
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9798400206757.001

Overview

• Title: Monetary Policy Transmission and Policy Coordination in China
• Authors: Sonali Das, Wenting Song
• Date: April 29, 2022
• Series: Working Paper No. 2022/074
• Summary:
  • The paper studies the transmission of conventional monetary policy in China with a focus on the interaction between monetary and fiscal policy given China’s unique institutional set-up for macroeconomic policy making.
  • Results indicate some progress but continued difficulties in the transmission of monetary policy.
  • Evidence of monetary policy pass-through to interest rates is found.
  • The impact of monetary policy measures that are not coordinated with fiscal policy is significantly weaker than that of coordinated measures.
  • The findings suggest the need for further improvements to the interest-rate based framework.

Key Findings

• Monetary policy pass-through:
  • There is evidence of monetary policy pass-through to interest rates.
• Coordination effects:
  • Monetary policy measures not coordinated with fiscal policy have a significantly weaker impact than coordinated measures.
• Overall assessment:
  • Some progress in transmission has been achieved, but notable difficulties remain.

Policy Implications and Recommendations

• Need for enhanced coordination:
  • Strengthen coordination between monetary and fiscal authorities to improve the effectiveness of monetary measures.
• Framework adjustments:
  • Further improvements to the interest-rate based framework are suggested to bolster transmission effectiveness.

Subjects and Keywords

• Subject: Central bank policy rate, Deposit rates, Financial services, Fiscal policy, Monetary policy, Monetary policy instruments, Yield curve
• Keywords: Central bank policy rate, China, Deposit rates, fiscal policy measure, monetary fiscal coordination, monetary policy, Monetary policy instruments, monetary policy measure, monetary policy pass-through, monetary policy shock, monetary policy transmission, pass-through to interest rates, textual analysis, Yield curve

Content in this bundle

• Working Paper
  • Working Paper (Markdown version)
  • Working Paper (PDF)