|
|
|
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; |
|
|
|
|
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
|
|
|
Viewed |
|
|
|
Full text
|
|
|
|
|
Abstract
|
|
|
|
|
Cited |
|
|
|
|
| |
Shared |
|
|
|
|
| |
Discussed |
|
|
|
|
