Abstract:This paper estimates a monetary policy rule for the People's Republic of China (PRC) using a standard OLS estimation and a Markov switching model. As the People's Bank of China (PBOC) generally uses a battery of instruments in the conduct of its monetary policy, these models are estimated using a constructed monetary policy index (MPI) in place of the traditional interest rate.This allows for a better understanding of the role the PBOC has played in the PRC's unprecedented economic growth and its relatively lo… Show more
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