Author(s): Xu Peng, Xu Wenge, School of Economics, Nankai University
Pages: 3-16
Year: 2015 Issue:  4
Journal: Journal of Guangdong University of Finance
Keyword:  monetary policy stance; dynamic adjustment; narrative approach; ordered choice model;
Abstract: By analyzing the quarterly China Monetary Policy Reports from 2001 to2014,this paper constructs a monetary policy stance measure framework. Then,considering the importance of the policy objectives,this paper empirically analyzes the dynamic adjustment of Chinese monetary policy by utilizing ordered choice model. The results show that the model that distinguishes the importance of the policy objectives can better characterize the dynamic relationship between monetary policy and output gap as well as inflation gap. The People’s Bank of China will change the adjustment intensity and direction of the monetary policy according to the macroeconomic situation. When the inflation gap becomes larger,price stability will be the priority of monetary policy goals. When the output gap becomes smaller or negative,economic growth will be the priority of monetary policy goals.