Finnish paper: DSGE model with shadow banks sheds light on China
Researchers augment DSGE model with shadow banks and interest controls
Ending the distortions created by China's tightly-controlled interest rate regime would boost investment and resist the growth of shadowy financing channels, research published by the Bank of Finland has found.
In the discussion paper, Monetary policy transmission in China: A DSGE model with parallel shadow banking and interest rate control, authors Michael Funke, Petar Mihaylovski and Haibin Zhu develop a dynamic stochastic general equilibrium (DSGE) model with added shadow banking sector and
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