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Estimating a Monetary Policy Reaction Function for the Dominican Republic

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  • José R. Sánchez-Fung

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Abstract

This paper specifies and estimates a hybrid monetary policy base reaction function for the Dominican Republic (DR). The estimated reactions suggest that the Central Bank has been biased towards targeting the gap between the parallel and official exchange rates, apparently doing so in a more systematic fashion after the mid 1980s. Remarkably, these findings are in line with the Central Bank's long-standing endorsement of a multiple exchange rate regime, and could imply a process of learning, given the monetary authorities' preferences.

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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/0201.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0201.

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Date of creation: Feb 2002
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Handle: RePEc:ukc:ukcedp:0201

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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/

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Keywords: monetary policy base reaction function; multiple exchange rates market; dynamic modelling; Dominican Republic;

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Cited by:
  1. Hasanov, Mübariz & Omay, Tolga, 2008. "Monetary policy rules in practice: Re-examining the case of Turkey," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 387(16), pages 4309-4318.
  2. M. Faizul Islam, 2010. "Subrata Ghatak and Jose R. Sanchez-Fung. Monetary Economics in Developing Countries (Hampshire: Palgrave-Macmillan, 2007, pp. 320)," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(7), pages 1042-1043.

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