Please wait a minute...
Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front. Econ. China    2009, Vol. 4 Issue (3) : 361-383
Research articles |
Reserve requirement, reserve requirement tax and money control in China: 1984–2007
 Download: PDF(318 KB)  
 Export: BibTeX | EndNote | Reference Manager | ProCite | RefWorks
Abstract In recent years, the People’s Bank of China (PBC) has carried out monetary policy by means of reserve requirement frequently in an effort to hedge the excess liquidity in the banking system. But just like other government taxes, reserve requirement maybe have an optimal required reserve rate (RRR). When the RRR have been raised to the optimal level, the effect of reserve requirement policy in money control and liquidity sterilization should also be withered due to the loss of the “tax base”. Therefore, we establish a theoretical model and analysis framework and make the corresponding econometric test and empirical analysis. The main conclusions are as follows: The optimal RRR in China at present is about 23%. If the RRR is further raised above 23%, the monetary authority should adjust the deposit and loan interest rates, interest margins between deposits and loans and the deposit reserve requirement rate to expand the using scope of the reserve requirement policy.
Keywords reserve requirement tax      optimal reserve requirement rate      money control      monetary policy      
Issue Date: 05 September 2009
 Cite this article:   
. Reserve requirement, reserve requirement tax and money control in China: 1984–2007[J]. Front. Econ. China,2009, 4(3): 361-383.
[1] Yafang Yu. Testing Commitment Models of Monetary Policy in China[J]. Front. Econ. China, 2016, 11(4): 668-693.
[2] Yizhong Wang,Frank M. Song. Macroeconomic Uncertainty, Fund Demand and Corporate Investment[J]. Front. Econ. China, 2015, 10(2): 365-391.
[3] Weibo Xiong. Constructing the Monetary Conditions Index for China[J]. Front Econ Chin, 2012, 7(3): 373-406.
[4] Xuan Liu. Money Quantity and Optimal Monetary and Fiscal Policy: A Quantitative Analysis[J]. Front Econ Chin, 2012, 7(2): 263-285.
[5] Jinwen Zhao, Hui Gao , . Impact of Asset Price Fluctuation on China’s Monetary Policy: An Empirical Analysis Based on Quarterly Data, 1994–2006[J]. Front. Econ. China, 2010, 5(1): 69-95.
[6] . The binary transmission mechanism of China’s monetary policy—A research on the “two intermediaries, two targets” model[J]. Front. Econ. China, 2009, 4(3): 335-360.
[7] ZHANG Chengsi. Structural instability of China inflation dynamics[J]. Front Econ Chin, 2009, 4(1): 30-45.
Full text