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Effects and Conduct of Macroprudential Policy in China

Author

Listed:
  • Kim, Soyoung
  • Shim, Seri
  • Chen, Hongyi

Abstract

This paper investigates the effects and conduct of macroprudential policies in China compared to those of monetary policy. Two types of structural VAR models, one with recursive zero restrictions and the other with sign restrictions on impulse responses, are used with monthly data. The main results of this paper are as follows. First, macroprudential policy has substantial effects on financial variables such as credit and house prices and macro variables such as output and inflation rate, as monetary policy does. Second, contractionary macroprudential policy is taken to stabilize credit in response to credit shocks, but monetary policy is not.

Suggested Citation

  • Kim, Soyoung & Shim, Seri & Chen, Hongyi, 2023. "Effects and Conduct of Macroprudential Policy in China," Journal of Financial Stability, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:finsta:v:66:y:2023:i:c:s1572308923000244
    DOI: 10.1016/j.jfs.2023.101124
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    References listed on IDEAS

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    More about this item

    Keywords

    Macroprudential policy; Monetary policy; VAR; Sign restriction; China;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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