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Monetary policy rules for a developing country: Evidence from Pakistan

Listed author(s):
  • Aleem, Abdul
  • Lahiani, Amine

This paper estimates forward-looking monetary policy rules to examine the interest rate setting behavior of the State Bank of Pakistan. Considering the external constraints on monetary policy, core inflation and a country-specific measure of the output gap, we demonstrate that the State Bank of Pakistan reacts to changes in inflation, the output gap and the federal funds rate.

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File URL: http://www.sciencedirect.com/science/article/pii/S1049007811000637
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Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 22 (2011)
Issue (Month): 6 ()
Pages: 483-494

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Handle: RePEc:eee:asieco:v:22:y:2011:i:6:p:483-494
DOI: 10.1016/j.asieco.2011.07.001
Contact details of provider: Web page: http://www.elsevier.com/locate/asieco

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  3. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 1-48.
  4. Aleem, Abdul, 2010. "Transmission mechanism of monetary policy in India," Journal of Asian Economics, Elsevier, vol. 21(2), pages 186-197, April.
  5. Robert J. Hodrick & Edward Prescott, 1981. "Post-War U.S. Business Cycles: An Empirical Investigation," Discussion Papers 451, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  8. Clarida, Richard & Gali, Jordi & Gertler, Mark, 1998. "Monetary policy rules in practice Some international evidence," European Economic Review, Elsevier, vol. 42(6), pages 1033-1067, June.
  9. Torres, Alberto, 2003. "Monetary policy and interest rates: evidence from Mexico," The North American Journal of Economics and Finance, Elsevier, vol. 14(3), pages 357-379, December.
  10. M. Ege Yazgan & Hakan Yilmazkuday, 2007. "Monetary policy rules in practice: evidence from Turkey and Israel," Applied Financial Economics, Taylor & Francis Journals, vol. 17(1), pages 1-8.
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  12. Hakan Berument & Hakan Tasci, 2003. "Monetary Policy Rules in Practice : Evidence from Turkey," Working Papers 0305, Department of Economics, Bilkent University.
  13. Asif Idrees Agha & Noor Ahmed & Yasir Ali Mubarik & Hastam Shah, 2005. "Transmission Mechanism of Monetary Policy in Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 1, pages 1-23.
  14. Reinhart, Carmen, 2002. "A Modern History of Exchange Rate Arrangements: Chartbook, 1946-2001," MPRA Paper 13192, University Library of Munich, Germany.
  15. Wasim Shahid Malik & Ather Maqsood Ahmed, 2007. "The Taylor Rule and the Macroeconomic Performance in Pakistan," Macroeconomics Working Papers 22213, East Asian Bureau of Economic Research.
  16. Philip R. Lane, 2003. "Business Cycles and Macroeconomic Policy in Emerging Market Economies," Trinity Economics Papers 20032, Trinity College Dublin, Department of Economics.
  17. Chadha, Jagjit S & Sarno, Lucio & Valente, Giorgio, 2003. "Monetary Policy Rules, Asset Prices and Exchange Rates," CEPR Discussion Papers 4114, C.E.P.R. Discussion Papers.
  18. Wasim Shahid Malik, 2007. "Monetary Policy Objectives in Pakistan : An Empirical Investigation," Macroeconomics Working Papers 22212, East Asian Bureau of Economic Research.
  19. Noor Ahmed & Hastam Shah & Asif Idrees Agha & Yasir Ali Mubarik, 2005. "Transmission Mechanism of Monetary Policy in Pakistan," SBP Working Paper Series 09, State Bank of Pakistan, Research Department.
  20. Mésonnier, J-S. & Renne, J-P., 2004. "Règle de Taylor et politique monétaire dans la zone euro," Working papers 117, Banque de France.
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  22. 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.
  23. Abdul Aleem & Amine Lahiani, 2011. "Estimation and evaluation of core inflation measures," Applied Economics, Taylor & Francis Journals, vol. 43(25), pages 3619-3629.
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