SEOUL, March 19 (AJP) - A research team led by Kookmin University Professor Oh Eun-young has published a study analyzing the evolution of China's monetary policy regimes, the university said Wednesday. The research specifically examines how the country has adapted its financial strategies in response to increasing global policy uncertainty.
The paper, titled "Dynamics of monetary policy regimes in China under rising global uncertainty: A time-varying approach," was featured in the international journal Finance Research Letters. The publication is highly regarded in the financial field, ranking within the top 5% of journals with an impact factor of 6.9.
Professor Oh Eun-young, the lead and corresponding author from the KMU International Business School (KIBS), conducted the research alongside Professor Georgios Magkonis of the University of Portsmouth and Professor Shuonan Zhang of the University of Southampton. The team utilized a specialized statistical model to track how global economic shocks influenced China’s production, prices, and central bank decisions over time.
The findings reveal a distinct shift in how the People's Bank of China (PBoC) responds to international instability. During the 2000s, global uncertainty often led to sharp drops in production and prices, which the PBoC countered with aggressive interest rate cuts and stimulus measures.
In contrast, the researchers found that policy responses have become more stable and moderate since the 2010s, a period often referred to as the "New Normal." The study confirms that China has shifted its primary focus toward maintaining price stability rather than simply reacting to fluctuations in industrial production.
This transition indicates that China is moving toward a more forward-looking policy framework. By prioritizing long-term inflation control, the Chinese economy has demonstrated increased resilience and an improved ability to absorb external economic shocks.
"This study empirically demonstrates that the responses of the Chinese economy and monetary policy to global policy uncertainty vary depending on policy regime changes," said Professor Oh Eun-young. "It shows that as China's monetary policy has developed into a forward-looking policy framework centered on price stability, the stability and resilience of the economy against external shocks have increased."
The research is considered significant for its analysis of how emerging economies adapt their monetary strategies to survive a volatile global environment. It provides a new academic and practical perspective on how central banks can refine their responses to international economic shifts.
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