The Effectiveness of China’s Monetary Policy in Critical Periods
DING Hua1,2, DING Ning3
1.School of Finance, Anhui University of Finance and Economics, Bengbu 233030, China; 2.Economics School of Anhui University, Hefei 230601, China; 3.School of International Trade and Economics, Anhui University of Finance and Economics, Bengbu 233030, China;
Abstract：
Using China’s macro economic data between January 1998 and June 2017, this paper picks December 1998, June 2005, December 2008 and June 2015 as four critical periods, and constructs a time-varying parameter factor extended vector autoregressive model (TVP-FAVAR). It then studies the time-varying influence of monetary policy shocks on macroeconomy in different times. The results show that: first, whether it’s quantity-based or price-based requlation, monetary policy can contribute to the growth of output and price stability, in which the output has a shorter time lag than the price. Second, in the period of crisis and the new normal period, price-based monetary policy has an upwind effect on inflation while the quantitative monetary policy is less effective than in the economic prosperity period. Third, quantitative monetary policy promotes consumption, investment, import and export and credit growth while price-based monetary policy brings better results in the regulation of deposit and lending rates, the RMB exchange rate and the stock.
2018 
