Monetary Policy Rule and its Performance under Inflation Targeting in Thailand

Taguchi, Hiroyuki; Wanasilp, Mesa

doi:10.20448/journal.501.2018.51.19.28

Cited by 6 publications

(6 citation statements)

References 11 publications

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“…They reported that Thailand's monetary policy rule, under inflation targeting, is characterized by a forward‐looking inflation‐exchange rate responsive rule, which is countercyclical to inflation in the long run. Consistent with Mugume (), Taguchi and Wanaslip () conclude that monetary policy in Thailand, under inflation targeting, has only a marginal transmission effect on inflation, perhaps due to the slow adjustment of policy rate. Estimated the policy reaction function of Thailand to see if the inflation targeting regime was linked to the inflation‐responsive monetary policy rule and investigated whether the monetary policy rule has a transmission effect on inflation.…”

Section: Review Of Empirical Studiesmentioning

confidence: 55%

Section: Review Of Empirical Studiesmentioning

confidence: 55%

“…Taguchi and Wanasilp () estimated the policy reaction function of Thailand to see if the inflation targeting regime was linked to the inflation‐responsive monetary policy rule and investigated whether the monetary policy rule has a transmission effect on inflation. The study employed VAR and SVAR techniques to simulate the impulse responses of inflation rates to monetary policy shocks.…”

Section: Review Of Empirical Studiesmentioning

confidence: 99%

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Monetary Aggregates Targeting, Inflation Targeting and Inflation Stabilization in Ghana

Abango¹,

Yusif²,

Issifu³

2019

African Development Review

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The central bank of Ghana (BoG) has operated monetary aggregates targeting and inflation targeting since the 1980s, to ensure enhanced output growth, low unemployment and stable, low inflation. Under inflation targeting, the inflation rate averaged 13.26 per cent per annum between 2007 and 2015, compared with 29.22 per cent per annum under monetary aggregates targeting. The relatively lower inflation rates notwithstanding, an average inflation rate of 13.2 per cent per annum is far above the medium-term target of 8 per cent. This paper has examined the effectiveness of monetary aggregates targeting and inflation targeting in keeping inflation at moderate levels. The autoregressive distributed lag (ARDL) model was applied to the data covering the period 1970-2015. The results show that monetary targeting has steered inflation to moderate levels only in the short run while inflation targeting has maintained low inflation rates in both short run and long run. But neither regime has kept inflation at stable levels and within the target band, due to the sluggish transmission of broad money supply and prime rate changes to inflation. We implore the monetary authorities to strengthen the institutional setup for steering short-term interest rates in Ghana. They should also enhance the BoG Act 2002 (Act 612), to develop secondary anchors and rules around output, money supply and fiscal deficit. Finally, the monetary policy committee should monetary policy credibility and transparency through strengthening its communication framework.

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Section: Review Of Empirical Studiesmentioning

confidence: 55%

Section: Review Of Empirical Studiesmentioning

confidence: 55%

Section: Review Of Empirical Studiesmentioning

confidence: 99%

See 1 more Smart Citation

Monetary Aggregates Targeting, Inflation Targeting and Inflation Stabilization in Ghana

Abango¹,

Yusif²,

Issifu³

2019

African Development Review

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“…In recent investigations, researchers have come up with better ways of dealing with these three puzzles and most of which is fashioned after the framework set by Lucas (1972) where rational expectation approach to the monetary policy study was recommended. Recent studies that have adopted the same approach include (Cochrane, 1998;Kahn et al, 2002;Zhang, 2009;Hsing, 2014;Aguir et al, 2015;Edeme and Obiayo, 2017;Adjei, 2018;Taguchi and Wanasilp, 2018) to mention but a few.…”

Section: Literature Reviewmentioning

confidence: 99%

Efficacy of Monetary Policy Instruments on Economic Growth: Evidence from Nigeria

Tule¹,

Ogundele²,

Apinran³

2018

Asian Economic and Financial Review

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The inability of monetary policies to efficiently and effectively exploit its policy objective could be a function of the pitfall of policy instruments adopted which seems to restrict its contributions to economic advancement in Nigeria. It is on this premise that this study investigated the efficacy of monetary policy instruments in Nigeria using monthly data from year 2000 to 2016. The study adopted the Johansen Multivariate Cointegration approach and Vector Error Correction (VECM). The Cointegration test established existence of long-term relationship between monetary policy instruments and economic growth. The study also revealed that there was monthly speed of adjustment of the variables towards their long-run equilibrium path to about 27 percent. The key discovery emanated from this study indicated that Consumer Price Index (CPI), Real Exchange Rate (RER), Money Supply (M2) and Interest Rate (INT) were significant monetary policy instruments that propelled economic growth in Nigeria during the period under review. Consequently, the study concluded by recommending Nominal GDP targeting as the framework to be adopted by the monetary authority in Nigeria in their monetary policy making process especially in the face of the new economic paradigm which is expected to be more plausible in improving and sustaining the stated Nigerian macroeconomic objectives. Contribution/ Originality: This study differs from others in examining the subject matter with high frequency data as against traditional annual data which has proved to be more efficient and captures more the effect of time, and the very first with such logical conclusion and recommendation for policy makers.

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“…Regarding the Philippines's policy rule, Salas (2006) revealed that the policy rate reacted to inflation effectively enough to stabilize inflation in a forward-looking manner after the IT adoption. As for Thailand's policy rule, Lueangwilai (2012) verified the contemporaneous rule of the policy rate responding to inflation and exchange rate movement; and McCauley (2006) and Taguchi and Wanasilp (2018) identified the inflation-responsive rule with forward-looking manner. Vietnam's monetary policy rule has not examined specifically by a policy reaction function, although the monetary policy was studied from the administration perspective (e.g., To et al, 2012) and from the transmission mechanism (e.g., Bui and Tran, 2015).…”

Section: Literature Review and This Study's Contributionsmentioning

confidence: 94%

Monetary Policy Rules in Emerging ASEAN Economies

Wanasilp

2021

International Journal of Asian Business and Information Management

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This paper examines the monetary policy rules for five emerging ASEAN economies—Indonesia, the Philippines, and Thailand as the adopters of inflation targeting (IT) and Malaysia and Vietnam as the non-IT adopters. For the methodology, this study applies a generalized method of moments that provides a consistent and efficient estimator for the estimation that contains endogenously determined variables. The questions are whether the rules of the IT adopters have fulfilled the Taylor principle and what has been the difference in the rules between the IT adopters and the non-IT adopters. The main findings are as follows: Regarding the IT adopters, their rules are characterized by inflation-responsive rules fulfilling the Taylor principle. As for the non-IT adopters, Malaysia follows solely an output-gap responsive rule, and Vietnam exhibits the mixed rules. The policy implications are that for the IT adopters there might be room to make their policy-rate responses more elastic to inflation, and that for the non-IT adopters, there would be a need to adopt an explicit IT framework.

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Monetary Policy Rule and its Performance under Inflation Targeting in Thailand

Cited by 6 publications

References 11 publications

Monetary Aggregates Targeting, Inflation Targeting and Inflation Stabilization in Ghana

Monetary Aggregates Targeting, Inflation Targeting and Inflation Stabilization in Ghana

Efficacy of Monetary Policy Instruments on Economic Growth: Evidence from Nigeria

Monetary Policy Rules in Emerging ASEAN Economies

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