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Approximating Monetary Policy: Case Study for the ASEAN-5

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  • Arief Ramayandi

    ()
    (Department of Economics, Padjadjaran University)

Abstract

Empirical studies on the process of monetary policy making in a number of advanced economies have shown that a simple policy reaction function (PRF) performs well in explaining the setting of monetary policy. This paper examines an application of a simple PRF in an attempt to broaden the understanding of monetary policy making processes in five developing ASEAN countries. As found to be the case in the more advanced economies, a simple PRF is also found to perform well in explaining the setting of monetary policy in these countries. Moreover, the findings uncover the main drivers behind the conduct of monetary policy and provide a relatively consistent explanation about the monetary policy episodes in the sample economies.

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File URL: http://lp3e.fe.unpad.ac.id/wopeds/200707.pdf
File Function: First version, 2007
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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 200707.

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Length: 40 pages
Date of creation: Aug 2007
Date of revision: Aug 2007
Handle: RePEc:unp:wpaper:200707

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Keywords: Monetary policy; policy reaction function; ASEAN;

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  10. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
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  16. Michael Woodford, 2001. "The Taylor Rule and Optimal Monetary Policy," American Economic Review, American Economic Association, vol. 91(2), pages 232-237, May.
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