Monetary Policy Interdependency in Fisher Effect: A Comparative Evidence

Monetary Policy Implementation Frameworks: A Comparative Analysis

We compare two stylized frameworks for the implementation of monetary policy. The first framework relies only on standing facilities, and the second one relies only on open market operations. We show that the Friedman rule cannot be implemented in the first framework, but can be implemented using the second framework. However, for a given rate of inflation, we show that the first framework unam...

The Effect of Financial Globalization on Monetary Policy Discipline: The Evidence from 22 Developing Countries

The literature on the benefits and costs of financial globalization for developing countries has exploded in recent years. There seems to be a consensus that financial globalization has had a "discipline effect" on monetary policy, because it has reduced the returns from using monetary policy to stabilize the output. As a result, monetary policy over recent years has placed more emphasis o...

Monetary Policy: Some Theory and Evidence

Threshold Effects in the Monetary Policy Reaction Function: Evidence from Central Bank of Iran

Determining how monetary policy makers react to changes in key economic variables has been of major interest to monetary economists. Estimates of monetary policy rules (reaction functions) are a widely used method for doing this. Behavior differs under different policy regimes, as in rule-based systems or chronic inflation. In practice, estimates of instrument rules have been used to descri...

Monetary policy rules in emerging market economies: issues and evidence

The paper reviews the recent conduct of monetary policy and central banks’ interest rate setting behaviour in emerging market economies. Using a standard open economy reaction function, we test whether central banks in emerging economies react to changes in inflation, output gaps and the exchange rate in a consistent and predictable manner. In most emerging economies the interest rate responds ...