Monetary policy rules under a fixed exchange rate regime: empirical evidence from China
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.
Year of publication: |
2007
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Authors: | Wang, Shengzu ; Handa, Jagdish |
Published in: |
Applied Financial Economics. - Taylor & Francis Journals, ISSN 0960-3107. - Vol. 17.2007, 12, p. 941-950
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Publisher: |
Taylor & Francis Journals |
Saved in:
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