부산대학교 도서관

This paper examines the effects of monetary policy in association with structural changes in Chinese economy over the period of 1992-2014. First we apply a threshold cointegration test to examine the stability of money demand function. The test indicates that money demand function experiences structural changes around 2002 and it becomes unstable after 2002. Given the instability of money demand function, we evaluate the effects of monetary policy in two periods before and after 2002.The VAR analysis indicates that the monetary policy is effective before 2002 with the stable money demand function, whereas it becomes ineffective after 2002 with unstable money demand function. The regime changes in the effects of monetary policy in association with instability of money demand function may reflect the transition of monetary policy practice from monetary targeting to interest targeting regime, adverse impacts of international financial market crisis, and others.