Monetary policy rules for financially vulnerable economies

Morón, Eduardo; Winkelried, Diego

doi:10.1016/j.jdeveco.2004.08.001

Cited by 63 publications

(4 citation statements)

References 40 publications

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“…Studies on developing countries under dollarization have been growing in number. Mor on and Winkelried (2005) show that developing countries that do not have strong financial resources have little room for external shocks such as capital outflows caused by foreign exchange rates. It shows how efficient it would be to use inflation-targeting policies under high debt dollarization, suggesting that in small open economies, it may be best to follow a non-linear policy to defend against exchange rates.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of monetary policy on the macroeconomy under dollarization: evidence from the Lao PDR

Park

Son

Wang

2023

ITPD

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PurposeThis study empirically aims to analyze the transmission of monetary policy in consideration of asymmetry based on the Bank of the Lao PDR (BOL)'s monetary policy tools and real and financial variables in the domestic market.Design/methodology/approachThis study adopts two approaches, conventional vector autoregression (VAR) and asymmetric VAR, to investigate the impact of monetary policy on macroeconomic variables including inflation and real GDP growth in the Lao PDR.FindingsUnder a highly dollarized monetary regime, the policy rate change plays a weaker role compared with M0, which exerts significantly positive effects on real GDP growth and inflation. The results of the asymmetric VAR model further substantiate that the real economy responds to a positive M0 shock (easing monetary policy) rather than a negative shock (tightening monetary policy).Practical implicationsOverall estimation results suggest that the effectiveness of monetary policy is limited in Laos, which would take priority over efforts to strengthen the development of the short-term financial market and de-dollarization.Originality/valueThis study can fill the gap in the literature in which the discussions on the transmission mechanism of monetary policy in the BOL's monetary policy are still little known.

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Section: Literature Reviewmentioning

confidence: 99%

Impact of monetary policy on the macroeconomy under dollarization: evidence from the Lao PDR

Park

Son

Wang

2023

ITPD

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“…Por un lado, varias investigaciones encuentran que la puesta en marcha de las MI es una herramienta útil para la moderación del nivel y la volatilidad de la inflación (Kontonikas, 2004;Vega y Winkelried, 2005;Batini y Laxton 2007;Gonçalves y Salles, 2008;McDermott y McMenamin 2008;Walsh, 2009;Lin y Ye, 2009). En el otro extremo se encuentran las investigaciones que enfatizan las debilidades y limitaciones de esta estrategia para estabilizar la inflación y su incertidumbre y conseguir simultáneamente objetivos macroeconómicos como bajas tasas de desempleo y un alto crecimiento económico (Morón y Winkelried 2005;Capistrán y Ramos-Francia, 2009;Brito y Bystedt, 2010;Carrasco y Ferreiro, 2011).…”

Section: Cuadro 3 Implementación Del Régimen De Metas De Inflación (unclassified

Las metas de inflación y su impacto en la incertidumbre inflacionaria: evidencia empírica para América Latina y el Sudeste Asiático

Rojas

Escalona

Guzmán

2020

Revista de Economía

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Se estudia la relación de retroalimentación entre la inflación y la incertidumbre inflacionaria; además, se estiman los efectos asimétricos que presentan las buenas y malas noticias en la determinación de la varianza condicional de la inflación; así como el impacto que ha tenido la adopción del régimen de metas de inflación (MI) en atenuar la incertidumbre inflacionaria. Para este propósito la investigación se enfoca en dos grupos de economías: i) la región latinoaméricana (Colombia, México, Perú y Uruguay) y la región del Sudeste Asiático (Corea del Sur, Filipinas, Indonesia y Tailandia). La metodología econométrica plantea un esquema . La evidencia empírica muestra el cumplimiento de la hipótesis de Cukierman y Meltzer para México, Perú, Uruguay, Corea del Sur, Filipinas, Indonesia y Tailandia; en tanto que el cumplimiento de la hipótesis de Friedman y Ball se presenta en Colombia, México, Perú, Uruguay, Filipinas y Tailandia. Finalmente, se identificó que después de la adopción del régimen de MI la persistencia de la incertidumbre inflacionaria ha disminuido en todas las economías analizadas; pero con mejores resultados para las economías asiáticas en los principales agregados macroeconómicos.

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“…4 Webb and Armas (2003) provided the first account of the implementation of IT in a dollarized environment. In this environment, Moron and Winkelried (2005) studied the optimal interest rate rule that a central bank should use considering a framework where a Céspedes et al (2004) type of balance sheet effect operates. Armas and Grippa (2005) describe the rationale for smoothing exchange rate volatility via sterilized forex interventions, reserve requirements on foreign currency liabilities of commercial banks, and the accumulation of central bank foreign currency reserves.…”

Section: Figure 1 Inflation Targeting Plus Dollarization Risk Control...mentioning

confidence: 99%

Inflation Targeting and Quantitative Tightening: Effects of Reserve Requirements in Peru

Armas¹,

Castillo²,

Vega

2014

lse-j-elaceaj

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This paper provides an overview of the reserve requirement measures undertaken by the Central Bank of Peru. It provides a rationale for the use of these instruments as well as empirical evidence of their effectiveness. In general, the results show that tightening reserve requirements has the desired effects on interest rates and credit levels at both banks and smaller financial institutions (cajas municipales).

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Monetary policy rules for financially vulnerable economies

Cited by 63 publications

References 40 publications

Impact of monetary policy on the macroeconomy under dollarization: evidence from the Lao PDR

Impact of monetary policy on the macroeconomy under dollarization: evidence from the Lao PDR

Las metas de inflación y su impacto en la incertidumbre inflacionaria: evidencia empírica para América Latina y el Sudeste Asiático

Inflation Targeting and Quantitative Tightening: Effects of Reserve Requirements in Peru

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