Economists have reached a consensus that central bank can improve their policy efficiency by following a monetary policy rule. Given that money supply is the principal policy instrument of the People's Bank of China (PBC) and its monetary targeting regime, this paper utilizes the counterfactual...

This paper utilizes VAR techniques to examine the relationship between a policy related variable and selected macro-variables in China. Johansen’s cointegration tests fail to find a moving equilibrium among the related variables. Based on a VAR model in first differences, we find that an...