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on Monetary Economics |
| By: | Keiko Honjo; Ben Hunt |
| Abstract: | This paper provides some empirical estimates on how tightly is it feasible to control inflation in a very small open economy such as Iceland. Estimated macroeconomic models of Canada, Iceland, New Zealand, the United Kingdom, and the United States are used to derive efficient monetary policy frontiers that trace out the locus of the lowest combinations of inflation and output variability that are achievable under a range of alternative monetary policy rules. These frontiers illustrate that inflation stabilization is more challenging in Iceland than in other industrial countries primarily because of the relative magnitudes of the economic shocks. |
| Keywords: | Efficient policy frontier , monetary policy rules , inflation-output variability tradeoff , policy coordination , Inflation , Iceland , Monetary policy , Economic stabilization , Economic models , |
| Date: | 2006–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/262&r=mon |
| By: | Christopher W. Crowe |
| Abstract: | A motivation for central bank independence (CBI) is that policy delegation helps politicians manage diverse coalitions. This paper develops a model of coalition formation that predicts when delegation will occur. An analysis of policy preferences survey data and CBI indicators supports the predictions. Case studies, drawn from several countries' recent past and the nineteenth-century United States, provide further support. Finally, the model explains why the expected negative relationship between CBI and inflation is not empirically robust: endogenous selection biases the estimated effect towards zero. The data confirm this. |
| Keywords: | Central bank independence , inflation , coalition formation , treatment effects , Central banks , Inflation , Political economy , |
| Date: | 2006–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/256&r=mon |
| By: | Jerome Vandenbussche |
| Abstract: | The move from individual decision making to committee decision making is widely seen as a major evolution in contemporary central banking. This paper reviews the relevant economics and social psychology literatures with a view to providing some insights into the question of optimal monetary policy committee design. While the preference aggregation literature points to the effect of committee structure on the extent of the time inconsistency problem and its associated costs, the belief aggregation literature analyzes how different committee structures affect the efficiency of information pooling, the process of social influence, and collective accuracy. In conclusion, we highlight the main tradeoffs that the analysis has brought to light and point to directions for future research. |
| Keywords: | Monetary policy , collective decision making , committees , |
| Date: | 2006–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/277&r=mon |
| By: | John Cady; Jesus Gonzalez-Garcia |
| Abstract: | The effects of the adoption of the IMF's International Reserves and Foreign Currency Liquidity Data Template on nominal exchange rate volatility are investigated for 48 countries. Estimation of panel data models indicates that nominal exchange rate volatility decreases following dissemination of reserves template data while the effects of indebtedness and reserve adequacy on volatility exhibit statistically significant changes. |
| Keywords: | Exchange rate volatility , foreign exchange reserves , transparency , SDDS , Exchange rate variability , Foreign exchange reserves , Liquidity , Transparency , Special Data Dissemination Standard , Economic models , |
| Date: | 2006–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:06/274&r=mon |