یک مدل کینزی های جدید برای تجزیه و تحلیل سیاست های پولی در چین

This paper adopts a four-equation New Keynesian model to evaluate the appropriateness of China's monetary policy framework. Our simulation results show that a hybrid rule that uses both interest rate and quantity of money as instruments outperforms the rules using one instrument alone at the current stage of economic and financial market development. Our analysis also shows that a sharp appreciation of the renminbi exchange rate, though effective in containing inflation pressures, would be quite disruptive to growth.

The Law of the People's Bank of China (PBoC) states that the objective of Mainland China's (henceforth China) monetary policy is to maintain price stability so as to promote economic growth. The policy instruments at the PBoC's disposal to achieve this objective include reserve requirement ratio, benchmark interest rates, re-discounting, open market operations, and other administrative policy instruments (including window guidance) specified by the State Council. The mandates of the PBoC are similar to those of central banks in industrial economies, although the PBoC is less independent than its counterparts in major economies. In reality, however, China's monetary policy appears to have more goals than mandated by the Law. According to Governor Zhou Xiaochuan (a speech note in Caijing Magazine, 25 December 2006), the PBoC aims not only at price stability and economic growth but also at full employment and external balance. Furthermore, it has the responsibility of promoting financial liberalisation and financial sector reforms. To achieve these objectives, the PBoC utilises instruments of both quantity and price in nature, largely reflecting severe structural impediments of a transitional economy and the underdevelopment of financial markets. This paper is meant to answer the following questions: How can one evaluate the effectiveness of the current monetary policy framework in China? Is the policy framework employing both quantity and price instruments more effective than one that uses a single instrument? We will use a small New Keynesian model with four behaviour equations to shed some light on these issues. These equations stem mainly from the first order conditions of open-economy dynamic stochastic general equilibrium (DSGE) models, and are modified somewhat here to capture the reality of the Mainland economy. Our simulation results show that a hybrid rule that relies on both interest rate and quantity of money in gearing monetary policy stance appears to outperform rules which use one instrument alone. Moreover, we find that a sharp appreciation of the renminbi exchange rate would notably hurt China's economic growth, although it can effectively manage inflationary pressures. The rest of the paper proceeds as follows: Section 2 discusses the rationale behind the use of both price and quantity instruments in gearing monetary policy stance on the Mainland. Section 3 presents and parameterises the four-equation model. Section 4 conducts policy simulations to shed light on some topical issues on China's monetary policy. Section 5 concludes the paper.

This paper is perhaps one of the first to adopt a New Keynesian model to analyse the appropriateness of China's monetary policy framework. Our simulation results seem to demonstrate that the current approach adopted by the PBoC that uses both interest rate and quantity of money as policy instruments is well vindicated. The interest rate instrument may not be effective for the PBoC to rely upon alone to conduct monetary policy because of structural impediments such as the segmentation of financial markets and the still emerging modern banking system. However, relying on the quantity rule of money alone is also inadequate, as it takes away the interest rate instrument for the PBoC to fine-tune the economy in the interim. Our model simulations do show that the monetary policy rule that combines both interest rate and quantity of money for monetary policy operations brings about the largest welfare gains measured by stability in inflation and output. Our simulation analysis also has some important policy implications. First, the exchange rate policy, although effective in helping curb inflation, has a limited role in managing economic growth. Second, a sharp appreciation of the renminbi exchange rate would be rather disruptive to growth. Gradual appreciation, on the other hand, is much less disruptive and seems to be a preferred policy option. It should be noted that the gradual approach to the exchange rate appreciation does not exclude the policy option that the authorities could also adjust the pace of the exchange rate appreciation in light of inflationary pressures of the domestic economy.