Monetary policy responses to external shocks

some policy simulations for Sri Lanka and Malaysia
  • 138 Pages
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by
South East Asian Central Banks, Research and Training Centre , [Kuala Lumpur]
Monetary policy -- Sri Lanka -- Econometric models., Monetary policy -- Malaysia -- Econometric mo

Places

Sri Lanka, Mal

StatementD.S. Wijesinghe.
Classifications
LC ClassificationsHG1220.8 .W44 1989
The Physical Object
Pagination138 p. :
ID Numbers
Open LibraryOL1691583M
ISBN 109839553313
LC Control Number91940861
OCLC/WorldCa25958352

Table 2 summarizes the estimates of the impulse responses to a U.S. monetary policy shock of one standard deviation. 9 To begin, note that the impulse responses of the U.S.

variables to a U.S. monetary policy shock are very similar to many estimates in the literature. In particular, U.S. inflation and U.S.

real output respond only slowly to a U.S. monetary policy by: Vol. 15 No. 2 External Shocks, Banks, and Monetary Policy to both domestic and foreign funds, we investigate the quantita-tive performances of optimal, simple, and implementable LAW-type interest rate rules relative to a Ramsey-optimal monetary policy rule.

We follow the definition of Cited by: 6. The empirical results show that shocks in US monetary policy rate mainly affect interest rate‐sensitive sectors in Hong Kong and that monetary easing from the European Central Bank and the Bank of Japan somewhat offsets the impact of tightening of the Fed.

The transmission of external shocks is through trade and capital : Hongyi Chen, Andrew Tsang. alternative policy reaction functions in the face of the observed structural shocks.

Section studies the role of the exchange rate in monetary policy when external volatility changes. Section analyzes the robustness of the results to normally distributed shocks and finds the Monetary policy responses to external shocks book policy under a.

with monetary policy to maintain these multiple goals. In the light of these events and discussions, this paper aims to answer three main ques-tions. First, we investigate the macroeconomic and financial effects (transmission channels) of external shocks on EMEs.

We consider three types of external shocks relevant for EMEs. On the other hand, when the volatility of external shocks rises, increasing the policy response to the exchange rate brings welfare improvements. In fact, a larger response offsets the negative impacts that greater external volatility has on output and inflation.

In this way, one can interpret the nonlinear response to the exchange rate. The government’ s economic policy is a response to. due to the external shock, second, the monetary policy is effective on supporting the economic growth and stabilizing the price level. External shock and Monetary Policy- Case study in Ethiopia By Esubalew Asmare1 Abstract This study investigates the effects of the recent oil and food price shocks on the main macroeconomic variables and analyzes the responses conducted by the National Bank of Ethiopia.

The Ramsey-optimal policy rule is used as a benchmark. The results suggest that such an optimal policy rule features direct and non-negligible responses to lending spreads over the cost of foreign debt, the real exchange rate and the US policy rate, together with a mild anti-inflationary policy stance in response to Monetary policy responses to external shocks book and external shocks.

Addressing these shocks, while preserving the stability of the union, is therefore a critical issue in the WAEMU. With a limited scope for monetary policy responses and in the absence of fi scal transfers at the regional level, national fi scal policies should in principle play an important role.

The first part of the book examines the evolution of monetary policy and prudential frameworks of the ASEAN­5, with particular focus on changes since the Asian financial crisis and the more recent period of unconventional monetary policy in advanced economies.

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The second part of the book looks at policy responses to global financial spillovers. The third and last part of the book elaborates. In order to estimate the contemporaneous response to monetary policy shocks, ⁠, I regress the residuals from the original VAR, ⁠, on or ⁠.

20 The effect of the FFR shock in current (unexpected) excess returns, discount rate news, real interest rate news, and cash-flow news for portfolio ⁠. Numerical exercises illustrate how both credible monetary and fiscal policies increase policymakers’ degrees of freedom to respond to adverse external shocks.

Emerging economies have been subject to abrupt reversals in capital inflows, which have adverse consequences for. Get this from a library. Monetary and Fiscal Policy Options for Dealing with External Shocks. [Enrique Flores; Daniel Leigh; Benedict J Clements] -- This paper utilizes an open-economy New Keynesian overlapping generations model, the Global Integrated Monetary and Fiscal Model (GIMF), to assess the macroeconomic effects of external shocks and the.

the fact that an external price shock leads to a trade-off between inflation and output gap, a monetary policy that focuses on headline inflation may cause a deeper recession than a policy that responds to a measure of inflation that excludes external price shocks that are highly flexible - known as core inflation.

Responses to Economic Shocks As the world struggles to deal with the COVID pandemic and its huge economic impact, Oxford University Press has pulled together the latest most relevant research from across our publishing programme on the causes and potential policy responses to major economic shocks and crises.

Macroeconomic shocks, Monetary policy, Fiscal policy, Technology shocks, News, Identification, SVARs, DSGE estimation JEL Classification Codes E3, E5, E6 1. INTRODUCTION At the beginning of the 20th century, economists began to recognize the importance of impulses and propagation mechanisms for explaining business cycle fluctuations.

A key. Finally, when the volatility of external shocks rises, increasing the response to exchange rate misalignments brings welfare improvements.

Details Monetary policy responses to external shocks FB2

In fact, a more aggressive response to the exchange rate offsets the impact that greater external volatility has on output and inflation, at the cost of inducing higher interest rate fluctuations.

Policy Rules and External Shocks Policy Rules and External Shocks. Laurence Ball. Share. Twitter LinkedIn Email. Working Paper DOI /w Issue Date September This essay discusses rules for monetary policy in open economies.

If policymakers seek to stabilize output and inflation, optimal rules in open economies differ. monetary policy shocks as innovations to the monetary policy instrument Œusually the Federal Funds Rate.

In order to estimate the e⁄ect of policy shocks on the cross-section of stock returns, Thorbecke runs a sequence on 7-variable VARs in which the seventh variable is the return on a portfolio of stocks.

Responses to one s.d. positive U.S. monetary policy shocks. Panels (A,B) and (C,D) present the impulse responses in the pre-ZLB and the ZLB periods, respectively. The dotted red lines and the blue lines are the impulse responses of short-term interest rates in the US and a.

term and long-term interest rates, on which our strategy to identify monetary policy shocks partly hinges on. The country-speci c ariablesv include, among others, those a ecting the components of household income and wealth: the unemployment rate, wages and house prices.

The main identifying assumption for the QE shock is that it generates a. COVID An intense external shock. The exceptionally strong fiscal and monetary policy responses, especially in advanced economies, have promoted a recovery in global investor sentiment since then, with some unwind of the initial sharp currency movements.

including by expanding the rule book on services and e-commerce and ensuring a. For monetary policy at the currency union level, please see Euro Area section. The Oesterreichische Nationalbank (OeNB) has declared readiness to supply sufficient cash to banks, ATM operators, and the economy in response to increased withdrawals.

Working. The book revisits some controversial arguments about stagflation and expansionary monetary policy, and it uses current time series data and empirical evidence to show why theories about the trade. shocks, followed by an overview of the many recent innovations for identifying shocks.

It then reviews in detail three main types of shocks: monetary, fiscal, and technology shocks. After surveying the literature, each section presents new estimates that.

Coibion() and inRamey(), the lack of robustness of the responses to monetary policy shocks ranges through both identi cation schemes, and empirical speci cations. Moving from these considerations, we reassess the empirical evidence on the e ects of monetary policy shocks by adopting an identi cation strategy that is robust to the.

Spillovers of United States and People's Republic of China Shocks on Small Open Economies: The Case of Indonesia by Berry Harahap, Pakasa Bary, Linda Panjaitan, and Redianto Satyanugroho; The Impacts of US Monetary Policy and Other External Shocks on the Hong Kong, China Economy: A Factor-Augmented VAR Approach by Hongyi Chen and Andrew.

Supply Shocks and the Conduct of Monetary Policy. they would have generated a monetary policy that was similar to the actual policy over this period. Thus, a mistake about the trend growth rate could be large enough to take us from the low inflation rate of the s to the high inflation rate of the s.

the latter strategy would be. In these cases, monetary policy appears to react pro-cyclically, likely exacerbating the impact of global financial shocks on domestic economic activity. Our analysis shows that macroprudential regulation can play an important role in favoring a more countercyclical response of monetary policy.

exchange rate variables for seven industrialised countries, and found that monetary policy shocks explained high volatility of the US current account. Kim () found little evidence of the J-curve in investigating the effects of monetary policy shocks on the trade balance in the United Kingdom (UK), France and Italy.we set out to obtain impulse responses to monetary policy shocks that are purged from the e ects of the information shock.

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These purged shocks are directly comparable to shocks to monetary policy rules in standard models. Second, we set out to analyse the impact of the central bank information shocks on nancial markets and the macroeconomy.Robert J.

Gordon, "Alternative Responses of Policy to External Supply Shocks," BPEA,pp. ; and Edmund S. Phelps, "Commodity-Supply Shock and Full-Employment Monetary Policy.