Structural Change and Counterfactual Inflation-Targeting in Hong Kong
AbstractThis paper evaluates structural change and adjustment in Hong Kong with Bayesian estimation of a small open economy with a fixed exchange rate show little or no change in the structural parameters or volatility estimates of the structural shocks before and after the Asian crisis and the experience of deflation. Terms of trade shocks are the most important sources of volatility for inflation in both periods. A counterfactual simulation shows that the dispersion of consumption and inflation volatility may have slightly decreased with an inflation-targeting regime with no uncertainty, but interest-rate volatility would have increased by factors of 50 to 100 percent.
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Bibliographic InfoPaper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 232009.
Length: 30 pages
Date of creation: Jul 2009
Date of revision:
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Bayesian Estimation; Structural Change; Inflation Targeting;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-11 (All new papers)
- NEP-CBA-2009-09-11 (Central Banking)
- NEP-MAC-2009-09-11 (Macroeconomics)
- NEP-MON-2009-09-11 (Monetary Economics)
- NEP-OPM-2009-09-11 (Open Economy Macroeconomics)
- NEP-SEA-2009-09-11 (South East Asia)
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