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Monetary policy frameworks from 1999 to 2003: the less it changes the less it stays the same

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  • Cobham, David

Abstract

This paper, prepared as a background chapter for an edited book, considers the changes in monetary policy frameworks (MPFs) over the first quarter of the 21st century. Section 1 presents the overall global and regional trends in monetary policy frameworks from 1999 to 2023. That analysis shows that the distribution of MPFs has changed rather less in recent years. However, the paper then turns to analyse in more detail the important changes within the two most widespread MPFs, inflation targeting and loosely structured discretion, over the period. Section 2 examines the rise in inflation targeting and the changes made within that framework by a number of mainly advanced economies, which have put more emphasis on output and employment but retained the primacy of the quantitative inflation target. Section 3 examines the changes in the monetary policy instruments commonly used within the loosely structured discretion framework, which have involved substantial improvements in effectiveness over time, typically associated with developments in money and bond markets, which facilitate switches to alternative MPFs. Overall, the paper highlights what amounts to a useful refocus from the choice of monetary policy framework to the operation of monetary policy.

Suggested Citation

  • Cobham, David, 2025. "Monetary policy frameworks from 1999 to 2003: the less it changes the less it stays the same," MPRA Paper 124937, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:124937
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    References listed on IDEAS

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    1. Cobham, David & Macmillan, Peter & Mason, Connor & Song, Mengdi, 2022. "Economic performance under different monetary policy frameworks," Journal of Policy Modeling, Elsevier, vol. 44(2), pages 431-449.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 1-48.
    3. David Cobham, 2021. "A comprehensive classification of monetary policy frameworks in advanced and emerging economies," Oxford Economic Papers, Oxford University Press, vol. 73(1), pages 2-26.
    4. Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2005. "Classifying exchange rate regimes: Deeds vs. words," European Economic Review, Elsevier, vol. 49(6), pages 1603-1635, August.
    5. Cobham, David & Song, Mengdi, 2021. "Transitions between monetary policy frameworks and their effects on economic performance," Economic Modelling, Elsevier, vol. 95(C), pages 311-329.
    6. Ethan Ilzetzki & Carmen M Reinhart & Kenneth S Rogoff, 2019. "Exchange Arrangements Entering the Twenty-First Century: Which Anchor will Hold?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(2), pages 599-646.
    7. Mr. Tomás J. T. Baliño & Mr. Charles Enoch & Mr. William E. Alexander, 1995. "The Adoption of Indirect Instruments of Monetary Policy," IMF Occasional Papers 1995/008, International Monetary Fund.
    8. Marco Arnone & Bernard J Laurens & Jean-François Segalotto & Martin Sommer, 2009. "Central Bank Autonomy: Lessons from Global Trends," IMF Staff Papers, Palgrave Macmillan, vol. 56(2), pages 263-296, June.
    9. David Cobham, 2024. "Monetary policy frameworks since Bretton Woods, across the world and its regions," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(3), pages 873-903, August.
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    Keywords

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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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