Abstract: This research extends standard Taylor rule to examine its adapta tion in China and reveals that PBC takes the rule as an important consideration while promoting the transformation and enriching of monetary tools. Specifically, PBC significantly responds to inflation and output indicators, especially the expectations. Furthermore, within four divisions since 1998 due to political fundamentals and exogenous shocks, it is found that PBC would adjust the weights on different objectives to adapt, and the tools were enriched to solve different liquidity problems. This research supplies new convincing evidence for Chinese adaptation of Taylor rule, and also reveals the change of China’s monetary policy frame. 

Is Taylor rule applicable in China：a new understanding based on economic phases