BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 30/2012:
Financial system reforms and China’s monetary policy framework: A DSGE-based assessment of initiatives and proposals
Michael Funke ()
and Michael Paetz ()
Abstract: This paper evaluates various financial system reform
initiatives and proposals in China in a DSGE modelling setting. The key
reform steps analysed include phasing out benchmark interest rates,
deepening the direct finance market, reducing government’s quantity-based
intervention on financial institutions. Our counterfactual model simulation
results suggest that the reforms will be beneficial only, if Chinese
monetary policy continues to rely on quantity-based interventions on
financial institutions or tightens the interest rate rule.
Keywords: DSGE model; financial sector reform; monetary policy; China; (follow links to similar papers)
JEL-Codes: E42; E52; E58; (follow links to similar papers)
36 pages, December 11, 2012
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