Monetary policy rules under a fixed exchange rate regime: empirical evidence from China

• Autores: S. Wang, Jagdish Handa
• Localización: Applied financial economics, ISSN 0960-3107, Vol. 17, Nº. 10-12, 2007, págs. 941-950
• Idioma: inglés
• DOI: 10.1080/09603100600749279
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• Resumen

  • This article uses an open economy model to estimate, using cointegration and error-correction analysis, China's monetary policy reaction function for the period 1993 to 2003. Alternative inflation-forecast-based (IFB) policy Taylor-type rules for the interest rate are examined and their parameters are estimated. The empirical results support the hypothesis that the central bank of China follows a Taylor-type rule for the interest rate, with the aim of inflation targeting and output smoothing.