Endogenous money in China: Evidence and insights on recent policies

Mookerjee, Rajen; Peebles, Gavin

doi:10.1016/s1049-0078(99)80075-x

Journal of Asian Economics

1998

DOI: 10.1016/s1049-0078(99)80075-x

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Endogenous money in China: Evidence and insights on recent policies

Rajen Mookerjee

Gavin Peebles

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Cited by 3 publications

References 31 publications

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Money and price relationship in China

Sun

Ma²

2004

Journal of Chinese Economic and Business Studies

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This paper investigates the effectiveness monetary policy by Granger causality tests in the two regimes of inflation and deflation, respectively. The surplus lag rolling estimation is applied to deal with the problem of the frequent structural changes in the Chinese monetary system. We found that the monetary policies have become less effective in stabilizing the price level in the deflation era that started from 1998. There is also empirical evidence to suggest that money was endogenous in China during the inflation period. This implies that the People's Bank of China had difficulty exercising the power of money supply to reduce inflation if the endogeneity was the result of the market behaviour. However, if the endogeneity was due to the government inflation-targeting rule, then there is no evidence to suggest that this rule has been effective for M0, M1 and M2 instruments, except for the M0 instrument during the inflation period of April 1990 to March 1995. Although it was found that money ceased to be endogenous in the deflation periods, it does not support the proposal of utilizing the money supply as a policy instrument, as we found that money is impotent in influencing price in the deflation regime. Our findings provide some empirical evidence to support the Chinese government adopting alternative policy instruments such as an active fiscal policy in the era of deflation.Money, price, Granger causality, China, JEL classifications: E52, E31, C32,

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Money and price relationship in China

Sun

Ma²

2004

Journal of Chinese Economic and Business Studies

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Inflation-targeting under a Managed Exchange Rate: the Case of the Chinese Central Bank

Dai

2006

Journal of Chinese Economic and Business Studies

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In 2004, the People's Bank of China (PBC) is reported to have abandoned the quantity of money as its intermediate goal and to adopt some elements of the apparatus of inflation targeting, without giving up the managed exchange rate regime for the renminbi (RMB), the Chinese currency. We show in this paper, using a dynamic setting, that partially implementing the apparatus of inflation targeting by the PBC to improve the performance of monetary policy encounters various difficulties from out-of-equilibrium dynamics to macro-economic and financial instability. In this context, some macro-economic measures can be helpful for reducing disequilibrium. Further development of internal monetary and financial markets and assigning balanced weights by the PBC to inflation and output targets are necessary conditions for the regime to be stable.Inflation targeting, renminbi (RMB), managed exchange rate, macro-economic and financial instability, JEL C LASSIFICATION : E52, E58, F41,

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Internality-Externality Analysis of Monetary Supply Post-2008 in Turkey

TÜRK¹,

Barışık

2021

Giresun Üniversitesi İktisadi Ve İdari Bilimler Dergisi

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Paranın yaratım sürecine yönelik tartışmalardaki fikir ayrılığı para arzının içsel (endogenous) mi dışsal (exogenous) mı belirlendiği noktasında derinleşmektedir. Monetarist görüşe ait enflasyon hedeflemesi rejimi altındaki Türkiye ekonomisini test eden 2008:10-2021:02 dönemli çalışmada para arzının Monetarist görüş varsayımını yanlışlar şekilde içsel olduğu tespit edilmiştir. Paranın içselliği para yaratımını üretim ile bağdaştırarak merkez bankalarını son ödünç verme mercii olarak sistemin içinde tutmaktadır. Analiz sonucunda para arzının içsel olduğu bulgusu diğer bir bakış açısıyla ilgili dönem için TCMB’nin fonksiyonel bir bağımsızlık taşımadığını da dolaylı olarak göstermektedir.

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Endogenous money in China: Evidence and insights on recent policies

Cited by 3 publications

References 31 publications

Money and price relationship in China

Money and price relationship in China

Inflation-targeting under a Managed Exchange Rate: the Case of the Chinese Central Bank

Internality-Externality Analysis of Monetary Supply Post-2008 in Turkey

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