Tracing the Monetary Policy Reaction Functions for the Case of a Small Developing Economy
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.
|Date of creation:||Oct 2003|
|Date of revision:||Oct 2003|
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- 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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