Analysis and Prospects of China’s Monetary Policy: Based on the New Keynesian Model

DOI

10.2991/978-94-6463-748-9_48How to use a DOI?

Keywords

Macroeconomics; New Keynesianism; Monetary policy; Inflation; Interest rate cut

Abstract

China’s economy demonstrated its strong resilience and stability in the first half of 2024. China’s gross domestic product (GDP) in the first half of 2024 was 61.7 trillion yuan, up 5.0% year-on-year. Under such a poor external environment, China’s economy still continued to recover to a positive trend, in which monetary policy is a major stabilizer of the national economy to enhance. Based on the New Keynesian theory, this paper analyzes the great role of the monetary policy released by the People’s Bank of China in the third quarter of 2024 in continuing to improve the national economy and encouraging the stimulation of public consumption. In the theoretical background of the New Keynesian model, this paper combines the monetary policy implementation reports of the second and third quarters of 2024 to explore, aiming at verifying the effectiveness of the government’s regulatory role as well as supplementing and looking forward to the policy deficiencies, and concludes that it is found that New Keynesianism has a decisive role to play in ameliorating short-term recessions, optimizing the transmission mechanism of the monetary policy as well as making the funds flow effectively to the real economy. It is hoped that the results of the research can provide positive guidance for China’s monetary policy in the coming quarter and even in the coming year.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Download article (PDF)

TY  - CONF
AU  - Jundengxian Li
PY  - 2025
DA  - 2025/07/03
TI  - Analysis and Prospects of China’s Monetary Policy: Based on the New Keynesian Model
BT  - Proceedings of the 2025 International Conference on Financial Risk and Investment Management (ICFRIM 2025)
PB  - Atlantis Press
SP  - 434
EP  - 439
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-748-9_48
DO  - 10.2991/978-94-6463-748-9_48
ID  - Li2025
ER  -