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Tracing the Monetary Policy Reaction Functions for the Case of a Small Developing Economy

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  • Arief Ramayandi

    ()
    (Department of Economics, Padjadjaran University)

Abstract

The paper outlines some alternative methodologies for estimating the monetary policy reaction function. It also discusses some of the advantages and disadvantages for each available alternative to be implemented in the case of small developing economies. Additionally, a simple case study using Indonesia’s data set was carried out. The result indicates that an estimated simple backward-looking reaction function is capable of capturing the path of policy instrument variable quite well.

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File URL: http://lp3e.fe.unpad.ac.id/wopeds/200301.pdf
File Function: First version, 2001
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Bibliographic Info

Paper provided by Department of Economics, Padjadjaran University in its series Working Papers in Economics and Development Studies (WoPEDS) with number 200301.

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Length: 22 pages
Date of creation: Oct 2003
Date of revision: Oct 2003
Handle: RePEc:unp:wpaper:200301

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Keywords: Monetary policy; small open economy;

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  1. Carl E. Walsh, 2003. "Monetary Theory and Policy, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232316, December.
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