Does market-oriented interest rate reform weaken the Bernanke’s puzzles in relation to monetary policy transmission in China?


ZHAN Minghua;LI Shuai;LIU Enhui;XU Yueli


School of Finance, Guangdong University of Foreign Studies; Institute of Fortune Management Research, Guangzhou key research base of humanities and social sciences;School of Economics and Management, Zhejiang University of Technology;;;School of Economics and Trade, Guangdong University of Foreign Studies


The Bernanke’s puzzles generally describes three characteristics contrary to the theoretical expectations of real monetary policy transmission and interest rate channels; however, different from these characteristics drawn from developed economies, China’s economic environment under the new normal presents its own. Thus, while interest rate marketization should weaken the theoretical expectation of the Bernanke’s puzzles, the conclusions may not meet the economic facts in China. The empirical study shows that through expected inflation effect and interest rate term structure, the Chinese market-oriented interest rate reform can effectively undermine the Bernanke’s puzzles as weaker than the theoretical expectation. The policy implication of this research is that quantitative and price-based monetary instruments are equally important for the implementation of monetary policies in China. In constructing a perfect interest rate regulation system of monetary policies, one shall not rely on the interest rate market reform alone; instead, the market-oriented reform of the whole economy may become a more important factor.


Bernanke’s puzzles;market-oriented interest rate reform;monetary policy transmission mechanism


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Total: 39 articles

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