The Ins and Outs of Chinese Monetary Policy Transmission
Miranda-Agrippino, S., Nenova, T., Rey, H.
Abstract:
Using a novel indicator for the People's Bank of China monetary policy stance, we estimate a policy rule that accounts for the dual nature of its price stability mandate---encompassing domestic inflation and the exchange rate---and for the evolution of its operational framework. The" Ins": The domestic transmission follows textbook patterns, with exceptions due to the active management of the renminbi and the financial account. The" Outs": International spillovers are powerful and affect commodity markets, global production and trade. The pass-through to foreign (US) prices is substantial. Financial spillovers are second-order, and mostly derivative from trade spillovers.
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