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- W2948012487 abstract "This study determines the optimal targeted reduction in reserve requirement ratio in China. We find that a targeted reduction in reserve requirement ratio incentivizes commercial banks to reallocate more credit resources to micro and small enterprises, thus eliminating the negative output gap, slightly dampening the rise in unemployment, but also increasing financial instability. Although there is little direct effect on inflation, raising the targeted reduction in reserve requirement ratio can help mitigate the positive effect of output gap on inflation so that an output gap increase is accompanied by a smaller increase in inflation. Optimal rules for targeted reduction in reserve requirement ratio and interest rate policy are derived. Output gap, inflation, and financial instability are three main factors driving the policy dynamics. A targeted reduction in reserve requirement ratio is complementary to interest rate policy, which helps eliminate the negative output gap and allows the interest rate to be less responsive to inflation volatility." @default.
- W2948012487 created "2019-06-07" @default.
- W2948012487 creator A5030727327 @default.
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- W2948012487 date "2020-02-01" @default.
- W2948012487 modified "2023-10-15" @default.
- W2948012487 title "Optimal targeted reduction in reserve requirement ratio in China" @default.
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- W2948012487 doi "https://doi.org/10.1016/j.econmod.2019.05.001" @default.
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