Are There Any Simple Monetary Policy Rules For China s Economy?

This paper probes various kinds of simple monetary policy rules into Chinas economy based on the New-Keynesian Aggregate Demand Equation to gauge the equilibrium interest rate and the Augment-Expectation Phillips curve to explore the expectation properties of Chinas resident. All the tests reach the same conclusion that there are no any simple monetary policy rules can fit the experiences of Chinas monetary policy. Alternative Phillips curves indicate that the empirical desirable trade-off between the faster economic growth and the lower inflation may only be achieved with the coordination of monetary and fiscal policies, as well as the discreet and flexible monetary policies, not the simple monetary policy rules.