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hat are being pursuit. A simple aim to control inflation, manage rates of unemployment, affect aggregate output or in some cases influence on exchange rates, can be some of their intentions.

 

Monetary policies, as any other policy needs instruments to be able to manipulate, in order to attain the desired effects in the economy, as consequence of the system’s complexity. Central Banks deal specially with interest rates, monetary base (money supply), reserves, discount window lending or arranging a currency board. As any other policy, monetary authorities must consider the time lags for the multiplier to take place, and determine their perspective. Should it adopt a short-term or long term perspective? Are they looking forward to ease money supply growth in order to decrease unemployment rate, depreciate local currency and promote their local exports competiveness abroad? Should they respond reactively with interest rates to inflationary pressures and economic overheats, augmenting leverage rates for the private sector and at the same time spurring foreign investment?

 

Control of the money supply

 

Many studies based on China’s economic development and growth, match in their hypothesis for China’s main macroeconomic objective “aimed at continuing to achieve economic growth, while keeping inflation at a minimum” (Seki, M. Nakayama, S. & Suzuki Y. 2006).

 

Yu Yong-Ding’s review of China’s Macroeconomic Development and Policies in the 1990’s, also sustains the hypothesis stated above. From this article we can see how China has been continuously attempting it’s sustainable growth (10.1%, annual average) keeping inflation at a minimum (Chart 9) since the past 2 decades. China’s highest rate of inflation was evidenced in 1994 (24.1%). Yong-Ding attributes this upshot to three main causes. First, shortage resulted from previous years massive capital flows translated to substantial growth of the monetary base (Figure 2). Second, price liberalization. Third, the sterilization policy deployed by the Public Bank of China (PBC), a policy that has underpin world’s currency wars. In this situation, the PBC reacted with restricting its monetary policy, controlling and reducing its monetary supply, increasing interest rates and the minimum reserve ratio.

 

In the past decade, it was observed a very similar behavior of China’s PBC macroeconomic reactions towards inflation and economic growth. Osamu Tanaka in his research of China’s Macroeconomic Policy Shift in 2008, which he refers to, as the political process from tightening to easing, recalls the macroeconomic policy trends. In 2003, PBC tightened its monetary policy and raised the minimum reserve rate, in response to overheated investment, by 5 basic points, from 7% to 7.5%. This decision was accompanied by an interest rate hike (benchmark rate hike) of 0.27% (Chart 17). In this decade the PBC had a policy of revaluating gradually the renminbi (RMB) currency. China has realiz本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。