Abstract
Smoothing investment fluctuations is a priority for central banks around the world. The People’s Bank of China (PBoC) is no exception. Its approach to macro-management is fundamentally different from that of its Western counterparts, however. The state’s dominant role in investment decision making and China’s inflexible foreign exchange rate regime make it difficult for the PBoC to use interest rate policy effectively. It must instead rely on more unconventional strategies to mitigate booms and busts.
The job of a good central banker is to take away the punch bowl just as the party gets going.
—Attributed to former Federal Reserve chairman William McChesney Martin
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Notes
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© 2012 Mark A. DeWeaver
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De Weaver, M.A. (2012). Taking Away the Ladle. In: Animal Spirits with Chinese Characteristics. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137110121_7
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DOI: https://doi.org/10.1057/9781137110121_7
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