Economics

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Balance on Monetary Policy and Macroprudential Policy

Received: 19 November 2019    Accepted: 05 December 2019    Published: 17 June 2020
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Abstract

Monetary policy is based on the theoretical rationale of the insufficient effective demand. The mainly logical difference between Keynes and Friedman are what domain interest rate directly and which factor will offset the effect of interest rate. The empirical application of monetary policy has several aspects deserving study: (1) the target, range, strength and effect of its monetary policy, (2) the theoretical development of Western monetary policy transmission, (3) monetary transmission channel in China, (4) the difference effect of monetary policy. The aggregate financing to real economy is China’s innovation to monetary policy. The background of macroprudential policy is financial crisis, its theoretical backup and application in real world including situation analysis, taking countermeasures, and tools application. By practical experience of China, the systematic financial risk lies on the unhealthy condition of most financial institute. The stock market crisis in 2015 is a reflection of systematic financial risk. Therefore, we should focus our attention on the special mechanism of financial risk and financial cycle in background of socialist political system with Chinese characteristics. We also should study liquidity condition by the central bank qualitatively and quantitatively.

DOI 10.11648/j.eco.20200902.12
Published in Economics (Volume 9, Issue 2, June 2020)
Page(s) 27-39
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Monetary Policy, Macroprudential Policy, Excess Liquidity

References
[1] Zeng Kanglin, “Zeng Kanglin's Anthology - Theory and Practice”, Chengdu: Southwestern University of Finance and Economics Publishing House, December 2014.
[2] Lu Lei, “Reflection of financial institution reform”, Beijing: China Financial Publishing House, January 2018.
[3] Li Dandan, “What central Bank and economists talk about?”, Financial Technology Research, February 21th, 2019.
[4] Tobin J., “Review of Stabilizing an Unstable Economy by Hyman P. Minsky”, Journal of Economic Literature, Vol. 27, pp. 105-108, 1989.
[5] Zhou Xiaochuan,“Keep the bottom line of systemic financial risks”, Excerpted from“The report to the 19th National Congress of the Communist Party of China”, From the People's Bank of China website. 2017.
[6] Yue Yue, “The influence of macroprudential system on Chinese commercial Banks and the corresponding countermeasures”, New Finance, Vol, 26 (02), pp. 30-35, 2019.
[7] Zhuo Shangjin, “Making better use of “double pillar policy framework”, Financial News, February 25th, 2017.
[8] Charles P. Kindleberger, “The World in Depression, 1929–1939”, Song Chengxian and Hong Wenda Trans, Shanghai: Shanghai Translation Publishing House, July 1986.
[9] Friedman M. and Schwartz A. J., “A Monetary History of the United States, 1867-1960”, Princeton University Press, 1963.
[10] Bernanke B. S. and Blinder A. S., “The Federal Funds Rate and the Channels of Monetary Transmission”, American Economic Review, Vol. 82, pp. 901-921, 1992.
[11] Reinhart C. M., Reinhart V. R. and Rogoff K. S., “Public Debt Overhangs: Advanced-Economy Episodes Since 1800”, Journal of Economic Perspectives, Vol. 26, pp. 69-86, 2012.
[12] Zhou Xiaochuan, “More terrible than the "grey rhinoceros"! What is the "Minsky moment" in Zhou Xiaochuan's consciousness?” Asset management circle, October 21th, 2017.
[13] Jordà Ò, Schularick M. and Taylor A. M., "Macrofinancial History and the New Business Cycle Facts", NBER Macroeconomics Annual, Vol. 31, pp. 213-263, 2017.
[14] Fisher I., “The Debt-deflation Theory of Great Depressions”, Econometrica, Vol. 1, pp. 337-357, 1933.
[15] Peng Wensheng, “The central bank’s report first mentions the “financial cycle”, which has far-reaching meaning”, China Finance 40 Forum, November 21th, 2017.
[16] Dalio R., “An In-depth Look at Deleveragings”, Bridgewater Report, 2012.
[17] Jin Penghui, “Macro-prudential management practice in Shandong”, China Finance, vol. 52 (11), pp. 31-33, 2017.
[18] Zeng Kanglin, Xu Peiwen, Luo Jin,“Innovative Thinking on the Excess Growth of Money Supply in China”, Finance & Trade Economics, Vol, 35 (02), pp. 11-18, 2014.
Author Information
  • Institute of Chinese Financial Studies, Southwestern University of Finance and Economics, Chengdu, China

  • Institute of Chinese Financial Studies, Southwestern University of Finance and Economics, Chengdu, China

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  • APA Style

    Zhi Junli, Zeng Kanglin. (2020). Balance on Monetary Policy and Macroprudential Policy. Economics, 9(2), 27-39. https://doi.org/10.11648/j.eco.20200902.12

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    Zhi Junli; Zeng Kanglin. Balance on Monetary Policy and Macroprudential Policy. Economics. 2020, 9(2), 27-39. doi: 10.11648/j.eco.20200902.12

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    AMA Style

    Zhi Junli, Zeng Kanglin. Balance on Monetary Policy and Macroprudential Policy. Economics. 2020;9(2):27-39. doi: 10.11648/j.eco.20200902.12

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  • @article{10.11648/j.eco.20200902.12,
      author = {Zhi Junli and Zeng Kanglin},
      title = {Balance on Monetary Policy and Macroprudential Policy},
      journal = {Economics},
      volume = {9},
      number = {2},
      pages = {27-39},
      doi = {10.11648/j.eco.20200902.12},
      url = {https://doi.org/10.11648/j.eco.20200902.12},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.eco.20200902.12},
      abstract = {Monetary policy is based on the theoretical rationale of the insufficient effective demand. The mainly logical difference between Keynes and Friedman are what domain interest rate directly and which factor will offset the effect of interest rate. The empirical application of monetary policy has several aspects deserving study: (1) the target, range, strength and effect of its monetary policy, (2) the theoretical development of Western monetary policy transmission, (3) monetary transmission channel in China, (4) the difference effect of monetary policy. The aggregate financing to real economy is China’s innovation to monetary policy. The background of macroprudential policy is financial crisis, its theoretical backup and application in real world including situation analysis, taking countermeasures, and tools application. By practical experience of China, the systematic financial risk lies on the unhealthy condition of most financial institute. The stock market crisis in 2015 is a reflection of systematic financial risk. Therefore, we should focus our attention on the special mechanism of financial risk and financial cycle in background of socialist political system with Chinese characteristics. We also should study liquidity condition by the central bank qualitatively and quantitatively.},
     year = {2020}
    }
    

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    T1  - Balance on Monetary Policy and Macroprudential Policy
    AU  - Zhi Junli
    AU  - Zeng Kanglin
    Y1  - 2020/06/17
    PY  - 2020
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    AB  - Monetary policy is based on the theoretical rationale of the insufficient effective demand. The mainly logical difference between Keynes and Friedman are what domain interest rate directly and which factor will offset the effect of interest rate. The empirical application of monetary policy has several aspects deserving study: (1) the target, range, strength and effect of its monetary policy, (2) the theoretical development of Western monetary policy transmission, (3) monetary transmission channel in China, (4) the difference effect of monetary policy. The aggregate financing to real economy is China’s innovation to monetary policy. The background of macroprudential policy is financial crisis, its theoretical backup and application in real world including situation analysis, taking countermeasures, and tools application. By practical experience of China, the systematic financial risk lies on the unhealthy condition of most financial institute. The stock market crisis in 2015 is a reflection of systematic financial risk. Therefore, we should focus our attention on the special mechanism of financial risk and financial cycle in background of socialist political system with Chinese characteristics. We also should study liquidity condition by the central bank qualitatively and quantitatively.
    VL  - 9
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