The Effectiveness of Structural Monetary Policy and Macro-Prudential Policies — Based on the DSGE Model That Includes Bank Heterogeneous Credit

Structural monetary policy and macro-prudential policies are important parts of the policy system of the People’s Bank of China. By constructing a dynamic stochastic general equilibrium model that includes the heterogeneity of corporate and bank credit, the authors divide the policies of the People’s Bank of China into seven categories, and explores the policy effectiveness of structural monetary policy, macro-prudential policy and traditional aggregate monetary policy. Through simulation of the model, it is found that whether facing technical shocks, interest rate shocks or credit shocks, the structural two-pillar policy tool that uses the deposit reserve interest rate as the target of operation is most conducive to economic stability. Technological progress has the most positive and lasting impact on output. Interest rates and credit policies will leave follow-up problems in the adjustment of the economy, and structural two-pillar policies can alleviate the impact of these problems.