The Exchange Rate as a Source of Disturbances: The UK 1979-2000

2002 ◽  
Vol 181 ◽  
pp. 96-112 ◽  
Author(s):  
David Cobham
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Policy Instrument ◽  
Monetary Regimes ◽  
Monetary Authorities ◽  
The Exchange Rate ◽  
Exchange Rate Changes ◽  
The Uk

Evidence is presented on the extent to which the possibility for the exchange rate to vary has been useful or unhelpful for UK monetary policy over the last two decades. ‘Large’ exchange rate changes and ‘large’ misalignments are identified, and the thinking and actions of the monetary authorities in response to the level of and changes in the exchange rate in successive monetary regimes are examined. It is argued that the exchange rate has not generally functioned as a useful automatic equilibrating mechanism or as a useful policy instrument; and that in nearly every phase there were movements of the exchange rate, or pressures on it, which for the authorities were unexpected and unwelcome. Thus the exchange rate has typically been a source of extraneous shocks.

scholarly journals Effectiveness of Monetary Policy in Morocco: Stability and Implications

2020 ◽  
Vol 3 (1) ◽  
pp. 14-28
Author(s):  
MERYEM ERRAITEB
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Central Bank ◽  
Narrow Sense ◽  
New Approach ◽  
Monetary Authorities ◽  
Aggregate Growth ◽  
The Exchange Rate ◽  
Effectiveness Of Monetary Policy

The purpose of this study is evaluating the effectiveness of monetary policy in Morocco. The results suggest that the monetary authorities must get out of the narrowness of logic monetarist by adopting a new approach which explicitly privileges the targeting of inflation as the ultimate goal, while referring to a multitude of indicators likely to guide the Central Bank in the conduct of its monetary policy as the exchange rate and interest rate next to the M3 aggregate growth rule. Thus, monetary authorities should out of the narrow sense monetarist by adopting a new approach that focuses explicitly targeting inflation as the ultimate goal, while referring to a multitude of indicators to guide the central bank in the conduct of monetary policy as exchange rate and Interest rate ET and this, alongside the growth rule M3.  

Prospects of the Initiation of Inflation Targeting in RF

2008 ◽  
pp. 46-57 ◽  
Author(s):  
A. Ulyukaev ◽  
S. Drobyshevsky ◽  
P. Trunin
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Economic Performance ◽  
Inflation Targeting ◽  
Policy Regime ◽  
Monetary Authorities ◽  
The Exchange Rate

Bank of Russia officials have recently declared the possibility of switching to the inflation targeting regime in the medium run. The article considers benefits and shortcomings of monetary policy regime as well as the economic performance of the inflation targeting countries. The authors conclude that Russia now starts meeting conditions crucial for the success of inflation targeting. In such circumstances Russian monetary authorities have an opportunity to weaken the exchange rate goal in favor of the inflation goal.

scholarly journals SINGAPORE'S EXCHANGE RATE POLICY: SOME IMPLEMENTATION ISSUES

2007 ◽  
Vol 52 (03) ◽  
pp. 445-458 ◽  
Author(s):  
HWEE-KWAN CHOW
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Policy Instrument ◽  
Exchange Rate Policy ◽  
Policy Framework ◽  
Successful Operation ◽  
Foreign Exchange Intervention ◽  
Rate Policy ◽  
The Exchange Rate

Reflecting the small open nature of its economy, Singapore has adopted an exchange rate-centered monetary policy framework since 1981. The exchange rate regime in Singapore is an intermediate regime that follows the basket-band-crawl system. With this managed float system, the MAS has successfully deterred speculators from attacking the domestic currency for most of the past three decades. At the same time, the flexibility accorded by the managed float system aided Singapore in escaping from the 1997–1998 Asian crisis relatively unscathed. In order to advance our understanding of the hitherto successful operation of Singapore's exchange rate policy, we examine the following three aspects of its implementation: (i) the use of the exchange rate instead of the interest rate as the key monetary policy instrument; (ii) the management of the currency basket in terms of foreign exchange intervention operations; and (iii) regulating the level of domestic liquidity alongside exchange rate policy. This paper also provides some insights on the challenges ahead that potentially face policymakers when implementing Singapore's exchange rate policy.

scholarly journals Key Policy Rate as the Main or Additional Instrument of Inflation Targeting Strategy in Serbia

2017 ◽  
Vol 55 (2) ◽  
pp. 143-159 ◽  
Author(s):  
Srđan Furtula ◽  
Milan Kostić
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Great Influence ◽  
Policy Instrument ◽  
Primary Objective ◽  
Key Policy ◽  
The Exchange Rate ◽  
The Republic

AbstractIn achieving price stability as the primary objective of monetary policy, the National Bank of Serbia uses the key policy rate as the main instrument of monetary policy, while other instruments have a supporting role - contribute to a smooth transmission of the key policy rate on the market, as well as the development of financial markets. However, because the conditions in which economic and financial system of the Republic of Serbia works, transmission mechanism of monetary policy is conducted mainly through the exchange rate channel, while the channel of interest rates almost did not work. The great impact the exchange rate channel is determined by the great influence of the single currency euro and the ECB on our country. Therefore, the aim of this paper is to analyse the efficiency of the key policy rate as a monetary policy instrument, because in recent years the primary instrument receives a secondary character in the monetary regulation.

scholarly journals The Efficacy of Monetary Policy Variables in Reducing Unemployment Rate in Nigeria

2015 ◽  
Vol 2 (2) ◽  
pp. 52 ◽  
Author(s):  
Amassoma D ◽  
Francis Oluwatosin Esther
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Unemployment Rate ◽  
Policy Instruments ◽  
Policy Instrument ◽  
Goods And Services ◽  
Policy Variable ◽  
Monetary Authorities ◽  
Sustainable Investment ◽  
Using Data

The main purpose of embarking on this study is to ascertain the effectiveness of monetary policy in reducing unemployment rate in Nigeria using data spanning from 1970-2013. Despite the inconsistences in monetary policy instruments in Nigeria over the years there had not been much concrete evidence from theoretical and empirical literatures, regarding whether or not monetary policy is an effective tool that can be used to achieve key macroeconomic objective in the country vis-a-vis unemployment rate. The aforementioned as made this current study to be inevitable in terms of ascertaining whether monetary policy instrument in form of contractionary monetary policy exhibits the tendency to reduce unemployment rate in the country which is a topical issue around the globe. In order to achieve the above goals, the study utilized multiple regressions (OLS) approach and error correction modelling was used to examine the effect of some key monetary policy variables on unemployment in Nigeria. Evidence from the result shows that exchange rate and consumer’s price index are the only monetary policy variables that influence unemployment rate while others do not. The results equally x-rayed that there is a unidirectional causality between monetary policy variable and unemployment rate which runs from exchange rate to unemployment. Owing from the above, the study therefore recommends that, the monetary authorities via central bank of Nigeria should ensure some reasonable monetary policy stands that would be suitable in reducing interest rate in the economy. Furthermore they should ensure relatively stable prices of goods and services which would guarantee sustainable investment that can enhance employment opportunities in the country.

scholarly journals DAMPAK KEBIJAKAN INFLATION TARGETING TERHADAP BEBERAPA VARIABEL MAKROEKONOMI DI INDONESIA

2007 ◽  
Vol 9 (1) ◽  
Author(s):  
Yati Nuryati ◽  
Hermanto Siregar ◽  
Anny Ratnawati
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Inflation Targeting ◽  
Time Series Data ◽  
Policy Instrument ◽  
Series Data ◽  
Long Run ◽  
The Exchange Rate ◽  
The Interest Rate

This paper discusses the effects of the inflation targeting framework on a number of macroeconomic variabels in Indonesia, especially after the enactment of Law No. 23/1999. The objectives of the paper are: (1) to describe the independence aspect of the inflation targeting policy; and (2) to highlight the effects of the inflation targeting on a set of main macroeconomic variables.The anaysis uses the Vector Autoregression (VAR) approach, emploting the time series data during the periode of 1998:1 to 2003:6. The main results of this research are: (1) The Central Bank (BI) independence is not yet effective in the implementation of the inflation targeting; (2) the shock on the interest rate affects price level and the exchange rate trivially; and (2) the factors that influence price’s variability are the base money, the interest rate, and the exchange rate. In the long run, a shock to the base money is more important than to the interest rate and to the exchange rate. The study suggests to use base money as the policy instrument of the monetary policy, instead of the short term interest.Keywords: monetary policy, independence, inflation targeting, VARJEL Classification: C32, E31, E52

scholarly journals Monetary Policy Under an Exchange Rate Anchor

2020 ◽  
Vol 20 (180) ◽  
Author(s):  
Mariam El Hamiani Khatat ◽  
Mark Buessings-Loercks ◽  
Vincent Fleuriet
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rate ◽  
Policy Design ◽  
Policy Instrument ◽  
Interest Rate Parity ◽  
Design And Implementation ◽  
Fiscal Dominance ◽  
Rate Parity ◽  
The Exchange Rate

This paper argues that there is scope for monetary policy under an exchange rate anchor, and discusses the related monetary policy design and implementation. It shows that the exchange rate can be used as the main monetary policy instrument while the policy rate can target the exchange rate. An exchange rate anchor is compatible with an inflation objective, provided fiscal dominance is not an issue, monetary conditions are supportive of the peg, and the level of international reserves is adequate. The paper argues that, while an exchange rate anchor is more prone to policy inconsistencies, there is ample scope for strengthening monetary policy design and implementation under soft pegs. In that context, the principles of dichotomy and interest rate parity are critical.

On the Exchange Rate Policy

2010 ◽  
pp. 21-28
Author(s):  
K. Yudaeva
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Policy ◽  
Institutional Changes ◽  
Crisis Period ◽  
Local Currency ◽  
High Inflation ◽  
Rate Policy ◽  
The Exchange Rate

The level of trust in the local currency in Russia is very low largely because of relatively high inflation. As a result, Bank of Russia during crisis times can not afford monetary policy loosening and has to fight devaluation expectations. To change the situation in the post-crisis period Russia needs to live through a continuous period of low inflation. Modified inflation targeting can help achieve such a result. However, it should be amended with institutional changes, particularly development of hedging instruments.

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