Inflation Targeting in South Korea, Indonesia, the Philippines and Thailand: The Impact on Business Cycle Synchronization Between Each Country and the World

Inoue, Takeshi; Toyoshima, Yuki; Hamori, Shigeyuki

doi:10.1142/9789814412858_0005

Cited by 10 publications

(12 citation statements)

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“…After futile attempts to rescue the value of the rupiah by raising short-term interest rates and injecting large volume of liquidity into the banking system, BI eventually resorted to targeting the monetary base in its attempt to re-absorb the excess liquidity from the banking system. Subsequently in July 2005, the country formally shifted to inflation targeting following the enactment of a new central bank act in 1999 (Inoue et al, 2012). Overall, the Indonesian authorities followed a tight monetary stance post-AFC, where interest rates were kept at a relatively high level.…”

Section: Indonesia: 1997-2007mentioning

confidence: 99%

Macroeconomic Uncertainty in South East Asia: A Comparative Study between Malaysia and Indonesia

Chow

Muhammad²,

Noordin³

et al. 2017

RAE

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This paper examines the historical pattern of macroeconomic uncertainty of two developing countries in the South East Asia, namely Malaysia and Indonesia. Comparisons of macroeconomic uncertainty are also made between both countries using a selected number of indicators for macroeconomic volatility. We find that while both countries were affected by similar external sources of macroeconomic uncertainty, these countries were also subject to domestic sources of macroeconomic uncertainty which were confined to the particular country. The analyses also reveal that Indonesia experienced more fluctuations compared to Malaysia when macroeconomic uncertainty is measured by volatility as a macroeconomic outcome and domestic sources of macroeconomic volatility. Contrarily, Malaysia displayed greater fluctuations than Indonesia when macroeconomic uncertainty is measured by external sources of macroeconomic volatility. Policy implications are drawn from the findings.

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Section: Indonesia: 1997-2007mentioning

confidence: 99%

Macroeconomic Uncertainty in South East Asia: A Comparative Study between Malaysia and Indonesia

Chow

Muhammad²,

Noordin³

et al. 2017

RAE

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“…Hence withdrawal from the IMF programme became another reason for the authorities to identify a well -suited monetary policy (Inoue et al, 2012). Thus, on April 2000 the BOT appointed the Monetary Policy Board (MPB) as the policy-making body and officially moved towards a flexible/floating exchange rate regime while adopting inflation targeting as the monetary policy strategy (Don, 2009;Ghosh and Rajan, 2008) where price stability or low inflation rate is the foremost objective to attain sustainable economic growth (Don, 2009).…”

Section: Background Of Studymentioning

confidence: 99%

“…In terms of monetary policy implementation, Thailand has transformed from monetary targeting to inflation targeting framework. While exchange rate regime has shifted from fixed/pegged to flexible/freely floating (Inoue et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

Unveiling the behaviour of policy reaction function in Thailand: A pre and post crisis investigation

Manogaran¹,

Sek

2017

Int. j. adv. appl. sci.

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Thailand was one of the first emerging Asian economies to collapse following the financial crisis of [1997][1998]. Correspondingly the monetary policy regime of this country has gone through an extreme shift from a rigid to floating exchange rate with the adoption of inflation targeting policy. Therefore, it is interesting to examine the behaviour of monetary policy of Thailand focusing on two different periods: pre-crisis and post-crisis using the threshold estimations method as evidence found on the nonlinearity structure on both sub-periods. Our results indicating, the policy reaction function of Thailand is decided based on economic growth (LGDP) and inflation (LCPI) for pre-and post-crisis respectively. Overall, the policy rule is reacting strongly to inflation gap. While policy rule is also responsive to output gap but was limited only at the post-crisis period. On the other hand, we also detected the policy rule behaving adversely to exchange rate changes aftermath crisis. To conclude, the ultimate goal of Thai monetary policy is to achieve low inflation rate for price stability. Perhaps, output gap is not the major concern since the economy has achieved high stable growth. Although Thailand was implementing inflation targeting aftermath crisis, the results revealing the existence of 'fear of floating' behaviour when the policy rule reacting strongly towards appreciation of exchange rate by declining the policy rate.

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“…While IT was formally adopted only in 2005, the Bank Indonesia has de facto announced inflation targets since 2000 (Inoeue et al, ). The Bank of Japan introduced IT as part of its anti‐deflation strategy in January 2013, but it plans to pursue its inflation target “very flexibly” (Soble and Giles, ).…”

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confidence: 99%

On the Future of Inflation Targeting in East Asia

Volz

2015

Review Development Economics

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This article analyzes the problems associated with inflation targeting (IT) regimes in a number of East Asian countries. It scrutinizes the policy conflicts that can arise when a central bank that has adopted a formal inflation target to guide the conduct of monetary policy simultaneously manages the exchange rate and pursues financial stability objectives. To this end, it empirically investigates the importance of exchange rate and terms of trade movements as determinants of inflation rates across East Asian economies and discusses the role of central banks in guarding financial stability and the ways this may conflict with an IT regime. The article argues that IT never really has been a suitable monetary framework for East Asian countries and that it should hence be supplanted by transparent monetary frameworks that explicitly recognize the multiple goals that are being pursued by East Asian central banks.

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Inflation Targeting in South Korea, Indonesia, the Philippines and Thailand: The Impact on Business Cycle Synchronization Between Each Country and the World

Cited by 10 publications

References 0 publications

Macroeconomic Uncertainty in South East Asia: A Comparative Study between Malaysia and Indonesia

Macroeconomic Uncertainty in South East Asia: A Comparative Study between Malaysia and Indonesia

Unveiling the behaviour of policy reaction function in Thailand: A pre and post crisis investigation

On the Future of Inflation Targeting in East Asia

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