Examining monetary policy transmission in the People's Republic of China – structural change models with a Monetary Policy Index

The financial support of the Irish Research Council and The Paul Tansey Economics Postgraduate Research Scholarship is greatly appreciated.This paper estimates augmented versions of the Investment–Saving curve for the People's Republic of China in an attempt to examine the relationship between monetary policy and the real economy. It endeavors to account for any structural break, nonlinearity, or asymmetry in the transmission process by estimating a breakpoint model and a Markov switching model. The Investment–Saving curve equations are estimated using a Monetary Policy Index, which has been calculated using the Kalman filter. This index will account for the various monetary policy tools, both quantitative and qualitative, that the People's Bank of China has used over the period 1991–2014. The results of this paper suggest that monetary policy has an asymmetric affect depending on the level of output in relation to potential, and that the People's Republic of China's exchange rate policy has restricted the effectiveness of the People's Bank of China's monetary policy response.Publisher PDFPeer reviewe

Examining monetary policy reaction in the People’s Republic of China – a Markov switching policy index approach

The authors are grateful for the financial support from the Irish Research Council (IRC) and The Paul Tansey Postgraduate Research Scholarship in Economics.This paper estimates a monetary policy rule for the People’s Republic of China (PRC) using a standard OLS estimation and a Markov switching model. As the People’s Bank of China (PBOC) generally uses a battery of instruments in the conduct of its monetary policy, these models are estimated using a constructed monetary policy index (MPI) in place of the traditional interest rate. This allows for a better understanding of the role the PBOC has played in the PRC’s unprecedented economic growth and its relatively low inflation over the last twenty years. This paper will not only examine the unique characteristics of Chinese monetary policy but may also give a more general insight into the dynamics of monetary policy reactions in other emerging markets and economies in transition.PostprintPeer reviewe

Private Sector Credit, Policy and Enforcement: 1978-1982. Quarterly Economic Commentary Special Article, May 1983

This paper is concerned with exammmg certain aspects of the Central Bank's quantitative credit guidelines over the period 1978 to 1982. The sectoral or personal lending guidelines are not considered in this paper. The approach is to consider first the policy aspects to the guidelines and in particular the relationship between the guideline and the external reserve objective. Secondly, the issue of neutralization of interest rates is discussed and some evidence is presented on this matter. Finally, the paper examines how Central Bank enforcement may act as an indicator of the existence and timing of credit rationing and concludes by demonstrating how policy and enforcement combined to cause a reduction in the Associated Banks' relative lending share

The Chinese Phillips curve – inflation dynamics in the presence of structural change

The financial support of the Irish Research Council (IRC) and the Paul Tansey Research Scholarship in Economics are greatly appreciated.This paper models inflation dynamics in China from 1987 to 2014 using a Phillips curve framework. The Phillips curve is generally estimated under the assumption of linearity and parameter constancy. The existence of structural breaks in China’s inflation dynamics make standard linear models inappropriate tools for analysis however. Our results find that the Chinese Phillips curve is characterised by a non-linear relationship. The inflation/output relationship takes the form of a concave curve. This suggests that changes in the level of output effect inflation in China more strongly in periods when output is operating below its potential but the relationship is weaker when output is operating at or above potential. Based on these findings, the People’s Bank of China (PBC) could consider output cost and policy response on a case-by-case basis depending on the level of output in relation to potential.PostprintPeer reviewe

Inefficiency in Irish Agriculture

Precis: The purpose of this paper is to compare the relative efficiency of two similar groups of farms in Irish agriculture. Using a restricted profit function to measure economic efficiency and both of its components, price efficiency and technical efficiency, it was found that differences in the behaviour of farm groups do exist and that both failed to maximise profits. The implications for achieving in creases in the growth rate of agricultural output are noted

Portfolio equilibrium and monetary policy in Ireland

The introduction of exchange controls in 1978 and the exchange rate uncertainty associated with Ireland\u27s entry into the European Monetary System (EMS) in 1979 gave rise to the possibility of a reduction in the degree of capital mobility between Irish and foreign financial markets and as a consequence a greater autonomy in the conduct of Irish monetary policy. The purpose of this paper is to evaluate Irish monetary policy in terms of a pre- and post-EMS entry framework by estimating an adaptation of Kouri and Porter\u27s (1974) portfolio balance model of an open economy. The principal finding is that the Central Bank has engaged in sterilisation policies since EMS entry but that this policy would prove ineffective if pursued for any indefinite period of time

Economic stabilisation, recovery and growth : Ireland 1979-96

This article reviews the transformation of the Irish economy since the early 1980s. Credit for the initial stabilisation of the economy is given to the shock therapy of cutting expenditure, favourable exchange rate and other external developments. Possible explanations of the higer rate of growth of output now being achieved include a high level of investment in human capital, improved quality of physical capital formation, and a falling burden of taxation. The contribution of the return to centralised wage bargaining and the role of European Union (EU) assistance are also discussed. The prospects for further economic growth over the medium term are considered to be good