TY  - GEN
TI  - China pro-growth monetary policy and its asymmetric transmission
AU  - Chen, Kaiji
AU  - Higgins, Patrick
AU  - Waggoner, Daniel F
AU  - Zha, Tao
PY  - 2016
PB  - Atlanta, GA: Federal Reserve Bank of Atlanta
LA  - eng
KW  - ddc:330
KW  - E5
KW  - E02
KW  - C3
KW  - C13
KW  - monetary transmission
KW  - endogenous switching
KW  - central government
KW  - institutional rigidities
KW  - GDP growth target
KW  - lower growth bound
KW  - nonlinear VAR
KW  - systematic monetary policy
KW  - policy shocks
KW  - heavy industries
KW  - investment
KW  - bank loans
KW  - lending channel
KW  - Geldpolitik
KW  - Geldpolitisches Ziel
KW  - Wirtschaftswachstum
KW  - Inflationsbekämpfung
KW  - Geldpolitische Transmission
KW  - China
AB  - China monetary policy, as well as its transmission, is yet to be understood by researchers and policymakers. In the spirit of Taylor (1993, 2000), we develop a tractable framework that approximates practical monetary policy of China. The framework, grounded in relevant institutional elements, allows us to quantify the policy effects on output and prices. We find strong evidence that monetary policy is designed to support real GDP growth mandated by the central government while resisting inflation pressures and that contributions of monetary policy shocks to the GDP fluctuation are asymmetric across different states of the economy. These findings highlight the role of M2 growth as a primary instrument and the bank lending channel to investment as a key transmission mechanism for monetary policy. Our analysis sheds light on institutional constraints on a gradual transition from M2 growth to the nominal policy interest rate as a primary instrument for monetary policy.
UR  - http://hdl.handle.net/10419/172906
UR  - https://www.pollux-fid.de/r/base-ftzbwkiel:oai:econstor.eu:10419/172906
H1  - Pollux (Fachinformationsdienst Politikwissenschaft)
ER  -