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The implementation of monetary policy in an emerging economy: the case of Chile

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  • Christian A. Johnson

    ()
    (Universidad Adolfo Ibañez)

  • Rodrigo Vergara

    ()
    (Universidad Católica de Chile)

Abstract

Central bank authorities base implementation of monetary policy on an analysis of multiple variables known as monetary policy indicators. In a small open economy such as Chile, these indicators may include inflation misalignments, unemployment, GDP growth, money growth, the current account balance, exchange rate volatility and international re-serves. A neural network approach is used to establish the correspond-ing weights considered by the Board of the Central Bank of Chile during the period 1995-2003. GDP growth and the difference between the actual and the target inflation were found to be among the variables of greatest weight in the monetary policy decision-making process of the Central Bank of Chile during this period.

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Bibliographic Info

Article provided by Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines in its journal Revista de Analisis Economico.

Volume (Year): 20 (2005)
Issue (Month): 1 (June)
Pages: 45-62

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Handle: RePEc:ila:anaeco:v:20:y:2005:i:1:p:45-62

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Keywords: Monetary Policy; Neural Network;

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References

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  14. repec:nbr:nberwo:12876 is not listed on IDEAS
  15. Rodrigo Vergara, 2003. "El Dinero como Indicador de Política Monetaria en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(121), pages 707-715.
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