Abstract
This paper discusses the macroeconomic effects of China's quantity-based banking regulatory tool, "window guidance," introduced in 1998. Using an open-economy DSGE model that includes a commercial banking sector, we study the stabilizing effects of this nonstandard quantitative monetary policy tool and the implications of quantity-based versus price-based monetary policy instruments for welfare. The analyses are relevant to the current overhaul of Chinese monetary policy.
Authors
- Hongyi Chen
- Michael Funke
- Ivan Lozev
- Andrew Tsang
JEL codes
- C61
- E32
- E44
- E52