Working Papers | University of California, Santa Cruz
M.A. Thesis | California State University, Fullerton
CHINESE MONETARY TRANSMISSION IN AN OPEN-ECONOMY FRAMEWORK:
EVIDENCE FROM A STRUCTURAL VAR MODEL
Abstract: Although sharing many of the same monetary policy tools of the West, Chinese central banking differs in many aspects. The People’s Bank of China leverages both market and non-market tools to fine-tune and dictate monetary policy. This paper seeks to evaluate Chinese monetary transmission mechanisms in an open-economy framework. Using a closed-economy VAR and a structural VAR, I estimate the effects of foreign and domestic foreign policy shocks on Chinese variables. The results suggest that Chinese monetary policy is beginning to match that of developed Western economies, with a specific emphasis on the interest rate channel.