arbiter
JournalsAccount

New Evidence on the PBoC’s Reaction Function

Makram El‐Shagi & Yishuo Ma

Journal of Economics / Ekonomicky casopis2025https://doi.org/10.31577/ekoncas.2025.01-02.01article
ABDC B
Weight
0.50

Abstract

While policy reaction functions of most major central banks are routinely approximated by fitting Taylor (type) rules to their policy rate, there is no such consensus for the People's Bank of China (PBoC). What makes it hard to get a clear impression of the ``true'' reaction function is that most papers in the extensive literature focus on a single aspect of the reaction function typically mostly comparing it to one (or a few) widely used baseline models. Contrarily, we assess a broad range of questions regarding the reaction function in a unified approach, estimating several hundred reaction functions. While we find that no single policy measure fully captures all aspects of the PBoC's policy, our paper provides clear evidence for asymmetric behavior, support for an important role of monetary aggregates, and robust evidence for the PBoC considering both financial stability and exchange rate stabilization in its policy deliberations.

Open via your library →

Cite this paper

https://doi.org/https://doi.org/10.31577/ekoncas.2025.01-02.01

Or copy a formatted citation

@article{makram2025,
  title        = {{New Evidence on the PBoC’s Reaction Function}},
  author       = {Makram El‐Shagi & Yishuo Ma},
  journal      = {Journal of Economics / Ekonomicky casopis},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.31577/ekoncas.2025.01-02.01},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

New Evidence on the PBoC’s Reaction Function

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.