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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front. Econ. China    2010, Vol. 5 Issue (2) : 232-253    https://doi.org/10.1007/s11459-010-0012-5
Research articles |
The Taylor Rules and Macroeconomic Fluctuation in China: 1994–2006
Qiong Li1, Zhiwei Wang2,
1.Strategic Planning Department, The People’s Insurance Company (Group) of China, Beijing 100084, China; 2.School of Economics, Peking University, Beijing 100871, China;
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Abstract The correlation and controllability of money supply as the intermediate object of monetary policy is gradually weakening, the argument that interest rate substitutes the money supply for the alternative object is hotly discussed. According to the Taylor rule and its extensions, this paper has a positive analysis on the efficiency of Taylor-type rules in China through historical analysis, policy reaction function approach and co-integration technology of time series analysis. This paper draws a conclusion that Taylor rule is unstable in China, and less correlation can be found between interest rate and the output gap, and the central bank focus on the inflation target rather than economic growth. Therefore, the central bank should abide by the simple rule of inflation targeting.
Keywords Taylor rule      historical analysis      GMM test      co-integration analysis      
Issue Date: 05 June 2010
 Cite this article:   
Qiong Li,Zhiwei Wang. The Taylor Rules and Macroeconomic Fluctuation in China: 1994–2006[J]. Front. Econ. China, 2010, 5(2): 232-253.
 URL:  
http://academic.hep.com.cn/fec/EN/10.1007/s11459-010-0012-5
http://academic.hep.com.cn/fec/EN/Y2010/V5/I2/232
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