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In order to compare the effectiveness of China's price- and quantity-based monetary policy tools over time, we develop a structural vector autoregressive model with time-varying parameter and factor augmentation (TVP-FA-S-VAR model) to analyze the response of output gap to monetary policy shocks. We find that price-based regulation becomes increasingly effective as China's interest rate liberalization proceeds, while the effects of broad money supply on output have been diminishing. Additionally, as it becomes harder to measure the effectiveness of quantity-based regulation, China's central bank has been more prudent to rely on quantitative intermediaries. Moreover, as much as 40% residual information of the Taylor rule will be omitted using price-based intermediaries, while factor augmentation fails to increase the explanatory power of quantitative intermediaries significantly. The correlation between quantitative intermediaries and the real economy has been weakening, so that the quantity-based monetary policy tools are no longer suitable for government intervention in China. We develop a structural vector autoregressive model with time-varying parameter and factor augmentation (TVP-FA-S-VAR model) to analyze the response of output gap to monetary policy shocks. We find that price-based regulation becomes increasingly effective as China's interest rate liberalization proceeds, while the effects of broad money supply on output have been diminishing. China's central bank has been more prudent to rely on quantitative intermediaries. As much as 40% residual information of the Taylor rule will be omitted using price-based intermediaries, while factor augmentation fails to increase the explanatory power of quantitative intermediaries significantly. The correlation between quantitative intermediaries and the real economy has been weakening, so that the quantity-based monetary policy tools are no longer suitable for government intervention in China. [ABSTRACT FROM AUTHOR]

Domestic and international risk shocks have greatly increased the demand for systemic risk management in China. This paper estimates China's multi-layer financial network based on multiple financial relationships among banks, assets, and firms, using China's banking system data in 2021. An improved PageRank algorithm is proposed to identify systemically important banks and other economic sectors, and a stress test is conducted. This study finds that China's multi-layer financial network is sparse, and the distribution of transactions across financial markets is uneven. Regulatory authorities should support economic recovery and adjust the money supply, while banks should differentiate competition and manage risks better. Based on the PageRank index, this paper assesses the systemic importance of large commercial banks from the perspective of network structure, emphasizing the role of banks' transaction behavior and market participation. Different industries and asset classes are also assessed, suggesting that increased attention should be paid to industry risks and regulatory oversight of bank investments. Finally, stress tests confirm that the improved PageRank algorithm is applicable within the multi-layer financial network, reinforcing the need for prudential supervision of the banking system and revealing that the degree of transaction concentration will affect the systemic importance of financial institutions. [ABSTRACT FROM AUTHOR]

This paper aims to study the phased influencing factors of renminbi (RMB) exchange rate (CNY against USD) and investigate the predictability of the factors selected by multimodel. We first take the time points when China's main exchange reform policies are launched as the demarcation points and divide the entire sample from July 2005 to December 2020 into three periods. Then, we select the potential predictors using several sources, including all factors (without any selection), the factors selected by each of the five commonly used machine learning methods, the significantly correlated factors selected by traditional regression analysis method, and multimodel‐driven factors. Finally, we predict the exchange rate based on the above selected factors and compare the prediction results. The research results show that the main influencing factors are different in different periods, and the influence of phase events cannot be ignored. Even if their influence on the exchange rate has decreased as a result of the "811" exchange rate reform, the money supply and foreign exchange reserves continue to be the primary drivers of RMB exchange rates during the whole period of the sample. Additionally, RMB exchange rate forward is a robust influencing factor in all periods. By comparing the forecast errors, we find that the prediction accuracy of the factors selected based on multimodel is higher than that of the factors selected based on a single method or the tradition method. The findings of this paper provide the following insights for exchange rate managers: In exchange rate risk management, it is important to pay attention to the impact of macroeconomic factors such as foreign exchange reserves and the impact of staged events, and market expectations of exchange rates are equally important. At the technical level, it is recommended to improve the forecasting accuracy by forecasting exchange rates based on common factors selected by multiple better machine learning methods simultaneously rather than those selected by a single method. [ABSTRACT FROM AUTHOR]

This paper investigates the dominant attribute of housing in China for the period 2000 to 2017 with national monthly data. By employing VAR methodology and Chow test, the empirical results suggest that there is a statistically significant structural breakpoint in February 2009, and that the housing boom before 2009 was driven by self-occupation consumption demand while the rise in house prices since 2009 is a monetary phenomenon. These are consistent with the institutional backgrounds, when the first period encountered the end of housing as a welfare and rapid urbanization and the second period experienced the expansionary monetary policy introduced at the end of 2008. This implies that housing is gradually evolving from a necessity to a financial item, and policymakers should adopt policies that address the dominant attributes of housing at different periods. [ABSTRACT FROM AUTHOR]

The large-scale loss of ecosystem assets around the world, and the resultant reduction in the provision of nature's benefits to people, underscores the urgent need for better metrics of ecological performance as well as their integration into decision-making. Gross ecosystem product (GEP) is a measure of the aggregate monetary value of final ecosystem-related goods and services in a specific area and for a given accounting period. GEP accounting captures the use of many ecosystem services in production processes across the economy, which are then valued in terms of their benefits to society. GEP has five key elements that make it transparent, trackable, and readily understandable: (1) a focus on nature's contributions to people; (2) the measurement of ecosystem assets as stocks and ecosystem services as flows; (3) the quantification of ecosystem service use; (4) an understanding of ecosystem service supply chains through value realization; and (5) the disaggregation of benefits across groups. Correspondingly, a series of innovative policies based on GEP have been designed and implemented in China. The theoretical and practical lessons provided by these experiences can support continued policy innovation for green and inclusive development around the world. [ABSTRACT FROM AUTHOR]

The dynamics of swap spreads in China cannot be explained by commonly recognized factors documented in the literature. A unique feature of China's financial system is that commercial banks are not only long‐term loan providers but also dominant bond investors. Thus, the loan prime rate (LPR) is an opportunity cost for commercial banks' bond holdings. However, the LPR is largely determined by the central bank and often deviates significantly from equilibrium. In contrast, the swap rate is largely determined by the market. Our illustrative model and empirical evidence show that the LPR and funding availability affect bond yields more than swap rates, while volatility in the money market interest rate affects swap rates more than bond yields. Therefore, the swap spread is largely driven by the monetary policy. We also show that swap spreads can be a predictor of excess returns on bonds but not swaps. [ABSTRACT FROM AUTHOR]

Despite considerable reforms of Chinese monetary policy, very few papers have empirically examined the long-run effects of monetary policy on China's economic growth. Our purpose is to shed some light on it. We use money supply, real effective exchange rate, and real interest rate to describe monetary policy of China. We first apply the Granger causality test to annual data from 1980 to 2020 to examine the relationship between monetary policy and China's economic growth measured by Chinese real GDP. Our results suggest both money supply and real effective exchange rate Ganger cause Chinese real GDP, while real interest does not. We then adopt the autoregressive distributed lag (ARDL) model without asymmetric effects and nonlinear ARDL with asymmetric effects of exchange rate to estimate the impact of monetary policy on China's economic growth. Our long-run results indicate that expansion of money supply would promote Chinese real GDP growth. Both higher interest rate and depreciation would hinder China's economic growth. There are asymmetric effects of exchange rate on growth. Finally, the CUSUM and CUSUMQ stability test results reveal that the relationship among money supply, real effective exchange rate, and real interest rate with Chinese real GDP is stable. [ABSTRACT FROM AUTHOR]

The inflation rate was an important indicator for monitoring macroeconomic operations. In this study, we analysed the reasons for the divergence of consumer-side inflation (CPI) and production-side inflation (PPI) trends through large-dimensional data, so as to consider the impact of various macroeconomic factors on the inflation. From the perspective of the diversity of inflation rate formation mechanisms and model fitted performance, we used the large BVAR/large TVP-VAR models for analysis, considered the analysis capability and time-varying adaptability to large dimensional data. In view of the impulse response, we found that the impulse responses of CPI were relatively flat, and the responses of inflation were not exactly the same in both perspectives. The effects of various variables on the inflation in China were highly time-varying. In summary, the macro factors that led to significantly different responses and should be focused on energy prices, chemical prices, food prices, 7-day Inter Bank Offered Rate, narrow measure of money supply and the interaction between PPI and CPI. Accordingly, policymakers could develop more thoughtful and detailed scenarios from our findings. Moreover, the impulse response mechanism of each indicator to the inflation has validated the applicability of large dimensional analysis in macroeconomic studies. [ABSTRACT FROM AUTHOR]

This study empirically examines the influence of trade openness on the rate of inflation by focusing on the Chinese economy. The study utilizes data covering the period 1987–2019 and employs the autoregressive distributed lag model (ARDL) for the extraction of results from the designed models. The results of the study indicate that trade openness has indeed impacted the rate of inflation not only negatively but also significantly. This means that trade openness could be used as a tool to fight against higher inflation. Similarly, government expenditure, economic growth, exchange rate and money supply positively affect inflation. Money supply and government expenditures positively affect the rate of inflation in the short run. The study has important policy implications for the Chinese economy. [ABSTRACT FROM AUTHOR]

The present research aims to shed light on the effects of monetary policy on China's tourism market development from 2004 to 2016. Monetary policy plays an increasingly important role in China's economy. With the Chinese economy in rapid development, the country's tourism market experienced significant growth. This study uses the Granger Causality test and factor-augmented vector auto-regression (FAVAR) model to identify the effects of monetary policy on China's tourism market through four transmission mechanism channels. Our results show that macroeconomic growth promotes China's tourism market development. Moreover, the money supply channel, exchange rate channel, and other assets channel have significant and adverse effects on China's tourism market development. [ABSTRACT FROM AUTHOR]

This research examines the role of corporate investment inefficiency and abnormal investment behaviors on the effectiveness of monetary policy in China's transitional economy during 2001–2017. Using panel data regression models, we explore corporate investment inefficiency and its response to money supply and interest rates. We find that firms tend to overinvest and react abnormally to interest rates. Overall, the interest rate transmission mechanism is hindered and monetary policy becomes muddled. Our finding suggests that regulating the money supply or interest rates cannot help in coping with the dilemma between economic and financial stability until extensive financial reforms are made. Finally, we draw implications for overall financial reforms. [ABSTRACT FROM AUTHOR]

We examine the stock market returns in an environment in which the dates of the central bank's information supply through public announcements are not prescheduled. We document that positive excess returns are accumulated as early as 3 days before China's central bank releases the monthly data of monetary aggregates, which may be announced either early or late in a month. In particular, this pre-announcement premium exists only when an announcement arrives late in an announcement cycle. We provide a theoretical framework in which the degree of information acquisition in the market increases as the date approaches the end of an announcement cycle while investors are still waiting for the arrival of an announcement, a hypothesis that receives strong empirical support. We show that the information acquisition channel highlighted in Ai, Bansal, and Han (2022) explains the uncertainty reduction and the positive risk premium before monetary announcements in China. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of the monetary policies in 3 countries (the Republic of Korea, China and the United States) on the Korean stock markets (e.g., KOSPI), using a structural Vector Autoregression. We find that a positive shock in Money Supply (M2) in all 3 countries is positive to the Korean stock markets but the degree of the response differs from one another. Surprisingly, the response of the KOSPI was largest to China's M2, reflecting that China is Korea's largest trading partner. From the responses of Korea's industrial production and CPI, we speculate that a possibility of liquidity trap was not ruled out in some periods. We also find that the KOSPI responded negatively to a positive shock in Korea's policy rate while it rarely responded to the shocks in the China's policy rate and the US federal fund rate. We consider that China's policy rate did not affect Korea's economic activities as it was not a main monetary policy tool. We also consider that Korea's determination of policy rate was not fully free from the US monetary policy and thus any shock in the US federal fund rate was substantially mitigated in the KOSPI. [ABSTRACT FROM AUTHOR]

One previous study that estimated the demand for money in China, included output volatility and money supply volatility as two measures of uncertainty. The study found their effects to be transitory in the short-run but not in the long-run. We suspect that the lack of long-run effects could be due to both uncertainty measures being less comprehensive. When we replaced the two measures with a relatively more comprehensive measure known as policy uncertainty, we too found only short-run effects. However, when we separated increased uncertainty from declines and engaged in asymmetric analysis by estimating a nonlinear money demand function, we found that in the long run while increased uncertainty has a significant effect on the demand for money, decreased uncertainty does not. Our findings indicated that in China, as uncertainty increases people prefer to hold more cash. [ABSTRACT FROM AUTHOR]

Simple sum monetary aggregates are based on accounting conventions and have no aggregation theoretic foundations in economic theory. In contrast, Divisia monetary aggregates are directly derived from aggregation and index number theory. Credit card services cannot be included in simple sum monetary aggregates since accounting conventions cannot aggregate over assets and liabilities. However, microeconomic aggregation theory aggregates over service flows, not stocks, regardless of whether from assets or liabilities. As a result, it has recently been shown that Divisia monetary aggregates can be augmented to include credit card services and are available from the Center for Financial Stability in New York City. Other sources of consumer credit cannot be included in Divisia monetary aggregates for the United States since other sources of consumer credit in the United States are linked to specific groups of consumer goods and hence, violate the weak separability condition for the existence of an aggregator function. However, China produces a unique opportunity to broaden the Divisia monetary aggregates since sources of consumer credit, not limited to credit cards, are applicable to all consumption purchases and hence, do not violate the existence condition for an aggregator function. We report initial results with a broader Chinese Divisia monetary aggregate, including not only credit card services but also other broadly acceptable consumer loan services. [ABSTRACT FROM AUTHOR]

There are debates in the existing literature over whether silver outflows from China due to the American Silver Purchase Act (ASPA) of 1934 resulted in an economic crisis in China. However, all arguments in the debate rely on the assertion that the ASPA caused severe deflation—a claim with weak support in the data. In this paper, we investigate the bigger picture by using a newly consolidated historical Chinese dataset covering 1890–1935 to investigate the long‐run relationship of silver outflows, international trade, and fiduciary money. We find a mitigation effect of terms of trade after a decrease in the silver price triggered silver outflows from 1890 to 1934. More importantly, we find that the issue of fiduciary money was responsive to silver outflows such that China's aggregate money supply was not severely affected by the outflows. As a result, we clarify the puzzle of why China encountered neither serious deflation nor an economic crisis when the ASPA occurred. [ABSTRACT FROM AUTHOR]

In early 2020, the global economy was severely hit by the COVID-19 pandemic. Governments, including China, have adopted expansionary fiscal policies to stimulate demand and quantitative easing to increase the money supply to boost the economy by lowering lending rates. This paper starts from the influence of monetary policy on housing price mechanism, tries to explore the monetary policy on interest rate and money supply, finally establishes the VAR model, empirically analyzes the effectiveness of the impact of monetary policy on housing price changes, and makes a policy suggestion to demonstrate the necessity of consideration when stimulating the economy, to avoid housing price rise too fast, which affects the people's livelihood, and to have a negative impact on social sustainable development. [ABSTRACT FROM AUTHOR]

Women's autonomy remains under pressure from male dominancy in corporate business and household affairs. Women possess natural, analytical, social, political, and economic autonomy that acknowledges the United Nations' sustainable development goals (SDG-5) to empower women and girls in inclusive business. The study analyzes different aspects of women's autonomy in corporate business and the natural environment, leading to sustainable business outcomes in China between 1975 and 2019. In practice, Chinese women's political power in the decision-making process is minimal. It needs to restructure its socio-political autonomy to move toward the SDG-5 agenda. The results show that women have the political wisdom to handle corporate sustainability affairs, manage matters of corporate environmental responsibility, and increase their participation in the workforce, enabling them to sustain their lives as knowledge workers. Corporate women hold more stewardship values than men, enabling them to handle corporate sustainability matters. [ABSTRACT FROM AUTHOR]

This paper attempts to introduce central bank digital currency (CBDC) into the analysis framework of monetary policy, and studies the influence mechanism of e-CNY, central bank digital currency in China, on the monetary policy of the central bank from the aspects of money demand, money supply and monetary policy transmission mechanism. The research finds that e-CNY will have significant impact on monetary policy: (1) E-CNY will change the structure of money demand, speed up currency circulation, make central bank reserves more controllable and money supply more intelligent; (2) E-CNY will increase the volatility and expansion effect of currency multiplier to a certain extent; (3) E-CNY will dredge the transmission channel of monetary policy so as to improve the transmission effect of existing monetary policy tools. At the same time, based on the organic combination with structural monetary policy tools, it will achieve precise implementation of medium-term lending facilities (MLF), pledged supplementary lending (PSL), and it may bring new monetary policy tools. (4) E-CNY will make the intermediate target of monetary policy more controllable and reliable, and have a positive impact on the target of monetary policy through the smooth transmission of monetary policy channels. Therefore, it is necessary to strengthen the research on CBDC, give full play to the positive role of e-CNY in monetary policy, and improve the effectiveness of monetary policy. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to examine the deficit–inflation nexus in the two fastest growing economies, India and China, which happen to be crucial affiliates of the global growth generator countries apart from their association in Brazil, Russia, India, China, and South Africa. Design/methodology/approach: The paper uses the prism of the vector auto regression framework, for the period 1985–1986 to 2016–2017 for both India and China. For this purpose, gross fiscal deficit, money supply, exchange rate, crude oil prices and output gap are examined as the key elements in the determination of inflation. The econometric framework used chiefly comprises of cointegration analysis, vector error correction model, Granger causality and impulse response functions. Findings: The findings of this paper support the hypothesis that fiscal deficits are inflationary only in the Indian context and that the Ricardian equivalence cannot be negated for China at least in the short run. The results presented in the paper are a little agnostic about whether New Keynesian Phillips Curve (NKPC) explains the inflation dynamics in India, given that both inflation inertia and output gap are not robust. However, for the Chinese economy, NKPC along with structural theory is instrumental in describing trends pertaining to inflation during the period of the study. Practical Implications: The paper warrants broader policy framework to aim at addressing structural bottlenecks to ensure non-inflationary growth keeping in mind the structural views on inflation. Furthermore, the paper fosters greater synthesis between monetary and fiscal policies, especially considering the global economic disruptions the world economy is subject to. Originality/value: Considering there are only a limited number of studies on fiscal deficit of China, the present paper is of paramount significance in terms of growing concern over the sustainability of the growth process in China. Additionally, the paper is first-of-its-kind attempt to account the effectiveness of a healthy monetary–fiscal interface in achieving macroeconomic stability in India and China. [ABSTRACT FROM AUTHOR]

With the development of economic globalization, people have higher requirements for economic analysis and prediction, while the prediction accuracy of the traditional economic analysis and prediction model is quite low. Therefore, with the adaptation of the times, the "big data and artificial intelligence" technology is presented for researchers and data analysts. Based on the "big data and artificial intelligence" technology, economic analysis and prediction have unique advantages in many aspects. This study analyses the impact of "big data and artificial intelligence" technology on economic analysis and prediction. Based on the mean square error criterion, the variable selection method for constructing the interval data model is given. The interval financial time-series data of stock market, fund market, futures market, and money market are used to predict and analyze the macroeconomy, and the macroeconomic interval prediction method is given, which is different from the traditional point data model. The empirical results show that the Shenzhen Component Index, Shanghai fund index, futures market transaction amount, and narrow money supply in the interval financial data have little fitting error to the macroeconomic interval prediction model. Through the first mock examination, we get the macroeconomic forecasting model based on interval financial time-series data. We also use the single model structure and the combined model structure to give the macroeconomic change interval of 2020–2023 years in China. The experimental research results show that the proposed model has good performance in the prediction of economic development trends and that it can be used for forecasting subsequent economic development forecasts. [ABSTRACT FROM AUTHOR]

Prices of oil and other commodities have fluctuated wildly since the outbreak of the COVID-19 pandemic. It is crucial to explore the causes of price fluctuations and understand the source and path of risk contagion to better mitigate systemic risk and maintain economic stability. The paper adopts the method of network topology to examine the path of risk contagion between China's and foreign commodities, focusing on the dynamic evolution and transmission mechanism of risk contagion during the pandemic. This research found that among China's commodities, energy, grain, and textiles are net recipients of risk contagion, while chemical products and metals are net risk exporters. Among international commodities, industries have positive risk spillover effects on metals and textiles. During the first phase of the pandemic, China's commodities were the main exporters of risk contagion. However, international industries and metals became the main risk exporters and exerted risk spillover on China's commodities in the second phase of the pandemic. Moreover, based on total volatility spillover index of commodities, the risk contagion among the commodities follows three paths: "interest rate → commodities → money supply", "China's economic expectation → commodities → foreign economic expectation", and "commodities → consumer confidence". [ABSTRACT FROM AUTHOR]

Recently, China has declared its national objective of becoming carbon neutral by 2060. Hence, mitigating carbon dioxide emissions has become an important agenda of the Chinese government. Against this backdrop, this paper aims to evaluate the effectiveness of pursuing expansionary fiscal and monetary policies on China's carbon dioxide emission figures by using annual frequency data from 1980 to 2018. Accordingly, this study considers the levels of government expenditure and broad money supply as fiscal and monetary policy instruments, respectively. Besides accounting for structural break concerns in the data, the findings from the empirical analysis reveal that there are long-run associations between carbon dioxide emissions, economic growth, and fiscal and monetary expansion in China. Moreover, the results also show that in both the short- and long-run expansionary fiscal policy trigger higher carbon dioxide emissions while expansionary monetary policy inhibits the carbon dioxide emission figures of China. Furthermore, the results invalidate the existence of the Environmental Kuznets Curve hypothesis since the relationship between China's economic growth and carbon dioxide emissions is evidenced to portray an N-shape. In line with these findings, it is recommended that China achieve environmentally sustainable economic growth by aligning the national fiscal and monetary policies with the 2060 carbon-neutrality objective. [ABSTRACT FROM AUTHOR]

This paper aims to empirically examine the drivers of the bilateral balance of the trade model for the Georgian-Chinese economy from 2000 to 2020 and the influence of the Georgia-China free trade agreement on the Georgian-Chinese balance of trade. The Error Correction Model (ECM) of the ARDL was used to see if the balance of trade and its predictors have a long-term relationship. One of the ARDL's defining properties is that it may be utilized in circumstances when there is minimal data, regardless of the level of variable integration. According to the findings, a perceived effective exchange rate has a statistically significant positive impact on the balance of trade in the long run and a statistically significant negative impact on the balance of trade in the short run. The output is shaped to favor the presence of the elasticity attitude's J-Curve impact. The study also found that the comparative supply of money (MS) and GDP have only a minor impact on the trade balance in the medium and long run. The sponging and monetary methods are ineffective in characterizing the bilateral trade deficit between Georgia and China. [ABSTRACT FROM AUTHOR]

There are many external factors influencing the development of the banking industry, but few literatures discuss the effects of multiple factors on the banking industry. In order to better promote the healthy and stable development of China's banking industry, this paper builds a simulation model based on system dynamics and uses Vensim PLE to systematically discuss the impact of money supply, supervision level, financial innovation, and GDP on bank profits. The simulation results find that money supply, financial innovation, and regulatory levels have a negative effect on profits, but GDP can promote profits. [ABSTRACT FROM AUTHOR]

"The Collapse of Nationalist China: How Chiang Kai-shek Lost China's Civil War" by Parks M. Coble is a book that revisits the reasons behind the Kuomintang's (KMT) defeat in China's civil war. Coble focuses on Chiang Kai-shek's fiscal policies, which led to hyperinflation and corruption, alienating the urban population and compromising the morale and combat effectiveness of the KMT's armies. The book draws on primary sources such as Chiang's diaries and the papers of KMT leaders T.V. Soong and H.H. Kung. Coble argues that Chiang's financial policy was a disaster, attributing it to his belief in the importance of a large army and his habit of covering budget deficits by increasing the money supply. The book also acknowledges the complexities of economic recovery in the aftermath of Japanese occupation and the legacy of colonialism. Overall, this concise and engaging reassessment of the KMT's defeat will be of interest to historians and accessible to students. [Extracted from the article]

Interaction of fiscal and monetary policy is crucial for macroeconomic stability, especially for an economy with downward pressure as well as a tightened space for macro policy, like China. In this paper, we use a time-varying-parameter (TVP-VAR) model to study Chinese fiscal--monetary interaction and divide it into three periods. We claim that China went through a monetary dominant regime from 1996Q to 2017Q4 since the response of CPI to a fiscal expansion was negative in the short run and about zero in the long run, while the monetary expansion had positive effects on CPI. During this period, the response of government spending and money supply to each other's shock had the same sign, indicating that the two policies acted as complements. However, we argue that 2008Q4 was a turning point that divided this period into two different periods. The response level of M2 growth rate to a fiscal expansion kept rising from 1996Q1 to 2008Q4, indicating the central bank's increasingly active cooperation with fiscal policy, while it decreased from 2009Q1 to 2017Q4. Since 2018Q1, the economy has been going through a fiscal dominant regime in that the response of GDP growth rate and CPI to the fiscal expansion has sharply increased. We also argue that the relative change of the role between the two policies should be mainly attributed to the variation in the fiscal authority's characteristics because fiscal response to a monetary shock has remained at a similar level the whole time, even if there have been changes in the characteristics of the central bank. [ABSTRACT FROM AUTHOR]

This study investigates the causality between reserve accumulation and money supply in China over the period of 2000:01–2016:11. The bootstrap Granger full-sample and sub-sample rolling window causality tests are utilized. The full-sample test supports that reserve accumulations lead to significant endogenous money supply. However, the sub-sample test suggests that the endogenous money supply caused by reserve accumulations mostly existed before 2007 when China implemented a compulsory exchange settlement system. Structural changes also exist as a result of the impacts of excess money supply and reserve accumulations, which suggests specific backgrounds should be taken into account when investigating this issue. The rolling window causality test provides a more accurate result when considering structural changes, which proves reserve accumulations are more likely to cause endogenous money supply in a compulsory exchange settlement system. The significant difference before and after 2007 suggests that the ending of the compulsory exchange settlement system is helpful to improve the monetary policy independence. [ABSTRACT FROM AUTHOR]

Based on a standard two-sector New Keynesian sticky price model, we show that the response of sectoral output share to a monetary policy shock can be used to assess the relative price stickiness between the state-owned and private sectors in China. Specifically, the output share of the sector with more price stickiness increases to a positive monetary shock. A structural VAR analysis on the Chinese industrial data confirms that the price is stickier in the state-owned sector. This result implies that the real effect of monetary policy at the aggregate level in China would diminish along with the potential decline of the state-owned sector. [ABSTRACT FROM AUTHOR]

The paper proposes a novel hybrid method that extends previous work incorporating the fractionally cointegrated vector autoregressive and the permanent-transitory decomposition model. Using the hybrid method, we investigate whether the rapid rise in China's housing prices is a trend or cyclical fluctuation as well as whether there exists a housing price bubble. The findings indicate there exists a fractional cointegration relationship between housing prices and macroeconomic fundamentals in China, and that the fundamental value of housing prices is determined by macroeconomic factors. In particular, the upward trend in China's housing prices has shifted and decelerated since 2012, in line with GDP and money supply. Moreover, we provide evidence of the existence of a housing price bubble in China since 2012, particularly during the 2015–2018 period. We demonstrate that the hybrid model has a superior forecasting performance and decomposes the trend and cycle components more accurately than the conventional methods when estimating a system of possibly fractional cointegration relationship. [ABSTRACT FROM AUTHOR]

Our country's economic growth is overly dependent on government investment, and bank credit and money supply lack a strict monitoring mechanism. Therefore, rapid economic growth is always accompanied by inflation risks. In order to study the effect of inflation impact analysis, based on machine learning algorithms, this paper combines artificial intelligence technology to analyze the impact of inflation expectations, and constructs the central bank information disclosure index and inflation expectations index. Moreover, this paper will perform ADF unit root test on the data. In addition, after confirming that the data is stable, this paper uses the Markov Regime Transfer Vector Autoregressive (MSVAR) model and state-dependent impulse response function to test and analyze the effect of China's central bank communication in guiding the formation of inflation expectations. Through research, we can see that the machine learning algorithm constructed in this paper has significant effects, which can provide a reference for the analysis of the impact of inflation expectations. [ABSTRACT FROM AUTHOR]

This paper integrates changes in the reserve requirement ratio with other related monetary policies and estimates the offset and sterilization coefficients to examine the effectiveness of China's sterilization operations. The results show that China's sterilization operations have been fairly effective and China has been able to control domestic money supply relatively well despite a limited degree of exchange rate flexibility. The results also indicate that the failure to take changes in reserve requirements ratio into account leads to a substantial underestimate of the effectiveness of China's sterilization operations, illustrating that this policy is nonnegligible in studying China's sterilization operations. [ABSTRACT FROM AUTHOR]

This paper examines whether broader money supply (M2) and interest rate as two monetary policy tools may have differently affected housing prices in China. Empirical results show that there is a co-movement between housing prices and M2 in the short run and it becomes more pronounced after 2006 in the medium run. In addition, generally M2 positively affects housing prices. This supports the asset price channel which indicates that an easing monetary policy offers ample liquidity and results in raising the housing prices. The excess liquidity after 2008 spread to housing market, resulting in too much money chasing relatively few assets and triggering a surge in housing prices. On the other hand, we observe that co-movement between housing prices and interest rate is not very evident in most time. Moreover, we find that interest rate has a positive effect on housing prices which is not consistent with the user cost approach and indicates that a contracting monetary policy is not effective in curbing housing market. Not completely liberalized interest rate system and the high return on housing investments reduce the impact of interest rate on housing prices. These findings indicate that money supply is more effective than interest rate as channel to control the housing prices in China. The results are helpful for the scientific formulation of monetary policy for reasonable regulation of the market. [ABSTRACT FROM AUTHOR]

The traditional theory of money creation and supply has been widely questioned and criticized after the Global Financial Crisis in 2008. The existing empirical research on China's money supply has been basically based on this traditional theoretical framework of "monetary base-money multiplier," and ignored the important role of government finance in money creation. From the perspective of MMT, this paper investigates the evolution of the role of fiscal policy in China's money creation, and analyzes the macroeconomic impact of the fiscal creation of money. In the past 70 years, China has experienced a planned economy regime, a fiscal dominance regime and a monetary dominance regime. And during this time the dominant mode of money creation has gradually shifted from fiscal creation to credit creation, to the extent that the old fiscal creation mode has been ignored or even disdained. However, the fiscal creation of money is still of great importance. Compared with credit creation, it helps to promote the development of real economy, reduce systemic financial risks and narrow the wealth gap. This article argues that China should increase the contribution of fiscal expansion to money creation and reduce the dependence of money growth on credit, so as to better achieve the three goals of stable growth, risk prevention and structural adjustment. [ABSTRACT FROM AUTHOR]

In this research, a continuous wavelet method is employed to investigate the dynamic time–frequency varying linkage of hot money, money supply (M2) and housing prices in China. In most time hot money has insignificant effect on M2 which indicates that the effectiveness of sterilization. On the other hand, M2 has a significant influence on hot money especially in the long term. M2 affects housing prices significantly in the long term. However, the effect of hot money on housing prices is pronounced mainly in short and medium terms. Therefore, hot money inflows have not weakened the monetary control in recent years, and both M2 and hot money are important leading forces in the rising housing prices in China. These findings provide implications for the government to formulate monetary policy and regulate the housing market and capital flows. [ABSTRACT FROM AUTHOR]

The development of financial integration makes a country's economic links difficult. This is especially so for emerging market countries, which are more vulnerable to economic shocks. The objective of this paper is to explore whether the emerging market countries which adopt floating exchange rate system have realized, at the same time, in the aftermath of a crisis, free movement of capital flow and independence of monetary policy. This is done by introducing foreign exchange reserves into Mundell–Fleming model to do derivation. The approach is supported by empirical research based on 20 emerging countries including China, Brazil, Poland and South Africa and others. It was found that: (1) after the crisis, the emerging market countries that implemented floating exchange rate system did not achieve monetary policy independence. Rapid accumulation of foreign exchange reserves weakened the positive effect of the increase in money supply on output; (2) As a result of holding foreign exchange reserves, the independence of monetary policy in emerging market countries has been challenged, independently of the type of exchange rate system adopted, which proves the existence of dilemma phenomenon. Finally, this study puts forward policy recommendations on the exchange rate system and capital account convertibility for China. [ABSTRACT FROM AUTHOR]

This study investigates the stability of money demand function for China, using an innovation ARDL framework for co-integration test for the time period 1986-2018. Specifically, this study used narrow money (M1) and broad money (M2) as a measurement of money. To consider currency wealth and substitution effects, the estimated money demand model includes the real effective exchange rate in addition to income and interest rate. By incorporating the CUSUM and CUSUMSQ tests for stability in conjunction with co-integration analysis, the results confirm that there exists a stable long-run relationship for narrow money demand function. Importantly, the finding also discovers that real effective exchange rate appears to have a significant substitution effect on narrow money demand, which its omission can lead to biased result and misspecifications in the money demand function. This further corroborates that narrow money, (M1) act as a better measurement, which may have systematic influence on the trend of monetary aggregates. [ABSTRACT FROM AUTHOR]

The asymmetric and segmented causality between the monetary policy and real estate market in China is crucial but remains mystery. With the application of quantile causality test, this article investigates nonlinear dependence between property prices and money supply. Our results show that the tail causality exists in many cities in China. Moreover, we find that small-sized cities and inland cities are more sensitive to the broad money (M2) changes when the housing market return is in the tail quantile intervals. These findings can help the Chinese government formulate appropriate monetary policies regarding their implications in the real estate market. [ABSTRACT FROM AUTHOR]

This paper provides new insights into the dynamic relationships between money supply growth and housing boom, through the application of wavelet analysis. Specifically, in the time domain, the results highlight the existence of positive co-movement and causality between money supply growth and housing returns, during different sub-periods. In the frequency domain, the co-movements occur especially over the short and medium term. Our results are basically in line with the general equilibrium model developed by Frankel (Am J Agric Econ 68:344–348, 1986) and Li (The theory and empirical research on housing price overshooting under the impact of money supply in China, 2012). After controlling for the simultaneous impact of inflation and interest rates, the correlations become considerably strong in the short term since the early 2000s, which proves for an increasingly close interaction between money supply growth and real estate market. The results provide further evidence of the value of steady money supply growth for the maintenance of healthy and effective operation of the real estate market. Moreover, appropriate signal released by monetary authorities is rapidly assimilated by the real estate market, which highlights that policy adjustments should focus on the short term horizons in order to improve policy pertinence and flexibility. [ABSTRACT FROM AUTHOR]

This paper applies the Markov-switching model to analyse the transition probabilities and generalized method of moments (GMM) with Newey–West heteroscedasticity and autocorrelation consistent covariance estimators (HAC) to examine the continuity of monetary policies in different countries when the U.S. and China change their monetary policies. Our results indicate that the euro area's monetary authority continues to increase/decrease their money supply to stimulate/depress the economy. In Japan, long-term economic recession motivated the Japanese government to maintain a loose money supply. The continuity of Korea's monetary policy in expansionary states lasts up to 5.1 years. Besides, the outcomes show the implementation of U.S. quantitative easing (QE), overnight reverse repurchase agreement (RRP), and Chinese RRP policies have significant spillover effects on other nations. Particularly, the effects on the euro area are the largest. Furthermore, although the monetary policies of China and the euro area seem to move in opposite directions, they are interdependent. [ABSTRACT FROM AUTHOR]

This article provides three pieces of evidence to show that money is not redundant in China: aggregate real money balance can affect aggregate demand even when its effect through short‐term interest rates is controlled. I estimate a DSGE model using Chinese data. With the estimated model, I find that monetary policy that controls the money supply (the quantity rule) is better than the one that controls the short‐term interest rate (the price rule) in terms of minimising welfare loss. I then discuss the optimal monetary policy that combines both the price rule and the quantity rule. [ABSTRACT FROM AUTHOR]

This paper examines the level and volatility effect of monetary policy on housing prices in China utilizing a novel set of housing price indices constructed by (Fang, H., QuanlinGu, W. X., & Zhou, L.-A. (2015). Demystifying the Chinese housing boom. NBER Macroeconomics Annual 2015, Volume 30. University of Chicago Press.). We find that in the long-run, average housing prices react positively to inflation, money supply and bank lending growth, and negatively to the reserve requirement ratio and benchmark lending rate. Housing prices in Tier 1 cities respond more sensitively to monetary shocks relative to Tier 2 and 3 cities, possibly due to surging demand and limited supply under housing-purchase restrictions (HPR). We further study the volatility effect of monetary shocks using the GARCH model and find that the benchmark lending rate, reserve requirement ratio and money supply growth have strong negative impact on the volatility of housing price growth. Our benchmark results remain robust after incorporating the HPR policy variable in the estimation, with a significant negative effect of HPR on housing price growth in Tier 1 and Tier 2 cities. Lastly, we conclude with recommendations on future monetary policy design and implementation, with a specific focus on the heterogeneous characteristics of China's housing market. [ABSTRACT FROM AUTHOR]

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This paper studies the information content of aggregate insiders' transactions in their own firms in China by analysing approximately 28,000 open market transactions from July 2007 to December 2014. The evidence suggests that publicly available information about aggregate insiders' transactions cannot predict future stock returns. However, the ability of aggregate insiders' transactions to predict future stock returns is positively associated with the strength of corporate governance. Results from vector autoregressive models and examination of profitable strategies corroborate these findings. [ABSTRACT FROM AUTHOR]

Understanding how defaults correlate across firms is a persistent concern in risk management. In this paper, we apply covariate-dependent copula models to assess the dynamic nature of credit risk dependence, which we define as "credit risk clustering". We also study the driving forces of the credit risk clustering in CEC business group in China. Our empirical analysis shows that the credit risk clustering varies over time and exhibits different patterns across firm pairs in a business group. We also investigate the impacts of systematic and idiosyncratic factors on credit risk clustering. We find that the impacts of the money supply and the short-term interest rates are positive, whereas the impacts of exchange rates are negative. The roles of the CPI on credit risk clustering are ambiguous. Idiosyncratic factors are vital for predicting credit risk clustering. From a policy perspective, our results not only strengthen the results of previous research but also provide a possible approach to model and predict the extreme co-movement of credit risk in business groups with financial indicators. [ABSTRACT FROM AUTHOR]

The article reports on the dynamics of hyperinflation in relation to the periods following World War I and World War II in several European countries including Hungary and China. A model is developed to study hyperinflation which includes a quantity theory concerning the stability of the demand for money when hyperinflation occurs. The model assumes a dichotomy between money and real sectors of the economy while treating hyperinflation as a monetary condition as it is a consequence of relying too heavily on the policy of currency issue to finance government spending.

The article focuses on the business implications of the government of Hong Kong's positive non-intervention economic policy. One of the Asian economies of particular interest to the Western observers is Hong Kong. Hong Kong is far smaller than Japan but it practices a unique brand of free enterprise that makes it worthy of closer study. Hong Kong depends heavily upon the export of locally manufactured goods to pay for a variety of imports, including a major proportion of its food and other various necessities. To encourage business efficiency, the Hong Kong Government systematically practices a policy of positive nonintervention. Growing concern about the export sector in Hong Kong has led to a debate within the business community regarding the appropriate response. The traditional local remedies have been to trade up in textiles, shift resources to new industries with good export prospects, which allow the free floating exchange rate to keep exports internationally competitive in the absence of a central bank, to permit the money supply to be linked to export earnings.