nep-mon New Economics Papers
on Monetary Economics
Issue of 2017‒01‒29
24 papers chosen by
Bernd Hayo
Philipps-Universität Marburg

  1. The Signaling Effect of Raising Inflation By Jean Barthélemy; Eric Mengus
  2. Israel's Triumph over Inflation: The Long and Winding Road By Razin, Assaf
  3. Macro-economic Management in an Electronic Credit/Financial System By Joseph E. Stiglitz
  4. Some implications of learning for price stability By Stefano Eusepi; Marc P. Giannoni; Bruce Preston
  5. Fire buys of central bank collateral assets By de Roure, Calebe
  6. Demonetisation: Some Theoretical Perspectives By Waknis, Parag
  7. Confidence Interval Projections of the Federal Reserve Balance Sheet and Income By Erin E. Syron Ferris; Soo Jeong Kim; Bernd Schlusche
  8. The Federal Reserve’s Evolving Monetary Policy Implementation Framework: 1914-1923 By Chabot, Benjamin
  9. Financial Constraints and Nominal Price Rigidities By Balleer, Almut; Hristov, Nikolay; Menno, Dominik
  10. What Helps Forecast U.S. Inflation?—Mind the Gap! By Ayse Kabukcuoglu; Enrique Martínez-García
  11. Identifying Interbank Loans from Payments Data By Anthony Brassil; Helen Hughson; Mark McManus
  12. Disagreement about Inflation Expectations By Alexander Ballantyne; Christian Gillitzer; David Jacobs; Ewan Rankin
  13. The Impact of Monetary Policy on Agricultural Price Index in China: A FAVAR Approach By Tan, Ying; Sha, Wenbiao; Paudel, Krishna
  14. A Perspective on Electronic Alternatives to Traditional Currencies By Gabriele Camera
  15. The Missing Bretton Woods Debate over Flexible Exchange Rates By Douglas A. Irwin
  16. Econometric modeling of exchange rate determinants by market classification: An empirical analysis of Japan and South Korea using the sticky-price monetary theory By Works, Richard Floyd
  17. Trade Invoicing Currency and First-stage Exchange Rate Pass-through By Christian Gillitzer; Angus Moore
  18. To QE or not to QE? New perspectives of an unconventional way of Eurozone revival after Brexit By Economou, Emmanouel/Marios/Lazaros; Kyriazis, Nikolaos
  19. Exchange rates and the yield curve By Stavrakeva, Vania; Tang, Jenny
  20. Interventions in Markets with Adverse Selection: Implications for Discount Window Stigma By Ennis, Huberto M.
  21. Foreign Banks and International Transmission of Monetary Policy: Evidence from the Syndicated Loan Market By Demirguc-Kunt, Asli; Horvath, Balint; Huizinga, Harry
  22. Repo Market Functioning when the Interest Rate Is Low or Negative By Jean-Sébastien Fontaine; James Hately; Adrian Walton
  23. The Household Cash Flow Channel of Monetary Policy By Gianni La Cava; Helen Hughson; Greg Kaplan
  24. İnflyasiya hədəflənməsinin əməliyyat çərçivəsi: ölkə təcrübələri AMB üçün nə vəd edir? By Adigozalov, Shaig; Huseynov, Salman

  1. By: Jean Barthélemy (Département d'économie); Eric Mengus (HEC Paris - Recherche - Hors Laboratoire)
    Abstract: This paper argues that central bankers should raise inflation when anticipating liquidity traps to signal their credibility to forward guidance policies. As stable inflation in normal times either stems from central banker's credibility, e.g. through reputation, or from his aversion to inflation, the private sector is unable to infer the central banker's type from observing stable inflation, jeopardizing the efficiency of forward guidance policy. We show that this signaling motive can justify level of inflation well above 2% but also that the low inflation volatility during the Great Moderation was insufficient to ensure fully efficient forward guidance when needed.
    Keywords: Forward guidance; Inflation; Signaling
    JEL: E31 E52 E65
    Date: 2016–08
  2. By: Razin, Assaf
    Abstract: The paper gives an economic-history perspective of the long struggle with Inflation. It covers the early acceleration to three-digit levels, lasting 8 years; The stabilization program, based on political backing triggered sharp fall in inflationary expectation, and consequently to sharp inflation reduction to two- digit levels; The convergence to the advanced countries' levels during the "great Moderation", And Israel's resistance to the deflation-depression forces that the 2008 crisis created. The emphasis is on the forces of globalization and the building of institutions, political, regulatory, financial, budget design, and monetary, which helped stabilize prices and output.
    Keywords: Deflation-Depression forces; Hyperinflation; Stabilization
    JEL: E00 E6 F3 F38
    Date: 2017–01
  3. By: Joseph E. Stiglitz
    Abstract: Modern technology provides the basis of an efficient low-cost electronic payments as an alternative to the current system where fiat money is the medium of exchange. This paper explores possible macro-economic implication, showing how such a financial system might enhance government’s ability to control the level of aggregate demand. As in other arenas, in second-best situations with uncertainty, systems where there is an attempt to directly control quantities directly may perform better (e.g. have less volatility) than those using prices and other indirect control mechanisms. The paper identifies conditions under which in a system of electronic money, macroeconomic variability is lower when the level and direction of credit creation is directly controlled, through appropriately designed credit auctions, than in a system of indirect control of, say, investment via the interest rate. This is especially important since much macro-economic instability is associated with instability in credit creation and in the fraction allocated to newly produced goods and services. The paper also explains how, in an open economy, in a system of electronic money, credit auctions combined with trade chits might enable the control of net exports, again enhancing macro-stability. Finally, we explain how under a system of electronic money, the rents that are currently associated with credit creation and that arise from bank franchises—that constitute a form of appropriation of the returns from trust in the government and its ability and willingness to bail-out banks in the event of a crisis or bank run—could be appropriated by the government to a greater degree than at present.
    JEL: E42 E44 E51 E52 F32 F38
    Date: 2017–01
  4. By: Stefano Eusepi; Marc P. Giannoni; Bruce Preston
    Abstract: Survey data on expectations of a range of macroeconomic variables exhibit low-frequency drift. In a New Keynesian model consistent with these empirical properties, optimal policy in general delivers a positive inflation rate in the long run. Two special cases deliver classic outcomes under rational expectations: as the degree of low-frequency variation in beliefs goes to zero, the long-run inflation rate coincides with the inflation bias under optimal discretion; for non-zero low-frequency drift in beliefs, as households become highly patient valuing utility in any period equally, the optimal long-run inflation rate coincides with optimal commitment - price stability is optimal.
    Keywords: Optimal monetary policy, Learning dynamics, Price stability
    JEL: E32 D83 D84
    Date: 2017–01
  5. By: de Roure, Calebe
    Abstract: In times of financial distress, central banks provide unlimited liquidity to avoid fire sales. In response, banks raise their demand for collateral assets, and the short-term scarcity of collateral securities leads to higher prices, the Fire Buy premium. To avoid collateral scarcity, central banks increase the set of eligible collateral assets. However, if the risk-shifting channel is open for these newly eligible securities, banks prefer to pledge them and pay another premium, the Risk-Shifting premium. With the full fixed-income trading book of 26 German banks, I identify each trade of each bank and investigate how unlimited liquidity provision affects collateral prices. Also, I match banks' trades with their balance sheet and show how funding liquidity impacts premia payment. I quantify the Fire Buy premium to be 15.6 bps; and the Risk-Shifting premium on BBB-rated assets to be 65.6 bps.
    Keywords: Fire Buy,Risk-Shifting,Haircut Subsidy,ECB,Over-the-Counter Markets
    JEL: E41 E44 E58 G11 G14 G15 G21
    Date: 2016
  6. By: Waknis, Parag
    Abstract: On November 8, 2017, the Prime Minister of India Narendra Modi declared currency denominations of Rs.500 and Rs.1000 to be illegal for use in transactions. These currency denominations together constituted almost 85% of total currency in circulation according to some estimates. Based on essentiality of money, and a segmented markets model perspective, I analyze the effects of this surprise demonetisation policy on the Indian economy.
    Keywords: demonetisation, essentiality of money, segmented markets, informal economy.
    JEL: E42 E51 E52
    Date: 2017–01–23
  7. By: Erin E. Syron Ferris; Soo Jeong Kim; Bernd Schlusche
    Abstract: In response to the financial crisis of 2008 and the subsequent recession, the Federal Reserve employed large-scale asset purchases (LSAPs) and a maturity extension program (MEP) with the purpose of reducing longer-term interest rates, and thereby promoting more accommodative financial conditions at a time when the conventional monetary policy tool, the federal funds rate, was at its effective lower bound. In this note, we presented the implications for the Federal Reserve's balance sheet and income arising from a range of future potential macroeconomic outcomes.
    Date: 2016–01–13
  8. By: Chabot, Benjamin (Federal Reserve Bank of Chicago)
    Abstract: The Federal Reserve has relied upon a number of different monetary policy implementation frameworks throughout its history. This paper describes the original implementation framework that evolved between 1914 and 1923 in response to new policy objectives and changing market conditions.
    Keywords: Monetary policy implementation; standing facilities; open market operations
    JEL: E52 E58 E59
    Date: 2017–01–18
  9. By: Balleer, Almut; Hristov, Nikolay; Menno, Dominik
    Abstract: This paper investigates how financial market imperfections and the frequency of price adjustment interact. Based on new firm-level evidence for Germany, we document that financially constrained firms adjust prices more often than their unconstrained counterparts, both upwards and downwards. We show that these empirical patterns are consistent with a partial equilibrium menu-cost model with a working capital constraint. We then use the model to show how the presence of financial frictions changes profits and the price distribution of firms compared to a model without financial frictions. Our results suggest that tighter financial constraints are associated with higher nominal rigidities, higher prices and lower output. Moreover, in response to aggregate shocks, aggregate price rigidity moves substantially, the response of inflation is dampened, while output reacts more in the presence of financial frictions. This means that financial frictions make the aggregate supply curve flatter for all calibrations considered in our model. We show that this differs fundamentally from models in which the extensive margin of price adjustment is absent (Rotemberg, 1982) or constant (Calvo, 1983). Hence, the interaction of financial frictions and the frequency of price adjustment potentially induces important consequences for the effectiveness of monetary policy.
    Keywords: Financial Frictions; Frequency of price adjustment; menu cost model
    JEL: E31 E44
    Date: 2017–01
  10. By: Ayse Kabukcuoglu (Koc University); Enrique Martínez-García (Federal Reserve Bank of Dallas and SMU)
    Abstract: The Phillips curve, which posits a relationship between inflation and domestic economic activity, introduces a crucial trade-off between real and nominal objectives for the central bank. Atkeson and Ohanian (2001), among others, present evidence that forecasts of U.S. inflation from Phillips curve-based models tend to underperform relative to naïve forecasts. We propose that globalization can be an important factor in explaining the poor performance of forecasts under a closed-economy Phillips curve. To illustrate that, we empirically evaluate the performance of open-economy Phillips curve-based forecasts constructed with global variables, such as G7 credit growth, G7 money supply growth, terms of trade, and the real effective exchange rate. These global variables perform significantly better than domestic variables, and serve as proxies for poorly-measured indicators of global slack. Moreover, we show that forecasts using simulated data from a workhorse open-economy New Keynesian model support our empirical findings on the open economy Phillips curve and also suggest that better monetary policy and aspects of the Great Moderation have improved the forecast accuracy of open-economy models.
    Keywords: Global Slack, New Open-Economy Phillips Curve, Open-Economy New Keynesian Model, Forecasting.
    JEL: F41 F44 F47 C53 F62
    Date: 2016–12
  11. By: Anthony Brassil (Reserve Bank of Australia); Helen Hughson (Reserve Bank of Australia); Mark McManus (Reserve Bank of Australia)
    Abstract: The interbank overnight cash market is central to the implementation of monetary policy in Australia. The Reserve Bank of Australia (RBA) has historically gathered information about this market via a survey that provided a summary of participants' daily lending and borrowing. These data were highly aggregated and, until May 2016, were the RBA's only source of quantitative information on this market. This paper develops an innovative algorithm that identifies overnight interbank loans from the millions of payments settled through Australia's high-value payments system. Using this algorithm, we are able to construct a historical loan-level database. By comparing aggregates from our database to the survey data collected by the RBA, we conclude that our algorithm successfully identifies these loans. Between 2005 and 2015, the daily correlations between the summary data and the algorithm output are greater than 90 per cent. The novel features of our algorithm are important; applying existing algorithms to Australia produces correlations below 40 per cent. So these novel features may also be useful for identifying overnight interbank loans in other countries. Using the loan-level database, this paper explores features of the market that were previously unobservable. But the main advantage of this new database is the ability to conduct previously infeasible analyses of this market, such as forthcoming analysis of how the market evolved during the global financial crisis.
    Keywords: interbank loans; payments; Furfine; rollovers
    JEL: C81 E42 E58 G21
    Date: 2016–12
  12. By: Alexander Ballantyne (Reserve Bank of Australia); Christian Gillitzer (Reserve Bank of Australia); David Jacobs (Reserve Bank of Australia); Ewan Rankin (Reserve Bank of Australia)
    Abstract: Average and median measures of inflation expectations can disguise substantial disagreement in expectations. Disagreement in expectations has important implications for anchoring of inflation expectations and central bank credibility. We use individual response data from five survey measures of inflation expectations to document five features of disagreement about inflation expectations in Australia: (1) there has been a decline in disagreement since the introduction of inflation targeting, except among consumers; (2) disagreement responds little to most macroeconomic news surprises; (3) disagreement among consumers is much larger than among professional forecasters; (4) disagreement and the mean level of inflation expectations co-move for consumers but not professional forecasters; (5) there appear to be persistent differences in consumer inflation expectations across different demographic groups. For professional forecasters, the reduction in the overall level of disagreement and unresponsiveness of disagreement to most macroeconomic news surprises is consistent with well-anchored inflation expectations.
    Keywords: inflation expectations; disagreement; dispersion; information rigidity
    JEL: E31 E52
    Date: 2016–04
  13. By: Tan, Ying; Sha, Wenbiao; Paudel, Krishna
    Abstract: We use recently available Chinese data from 2005m1 to 2016m2 to examine the impact of monetary policy on agricultural price using a factor-augmented vector autoregressive (FAVAR) model proposed by Bernanke et al. (2005). Results show the superiority of a FAVAR model with three variables and three factors over other specifications. Impulse response functions show that both money supply and interest rate have no impact on agricultural price in the long-run (beyond 50 months). However, results indicate the considerable short-run impact of monetary policy on agricultural price. According to forecasting error variance decompositions, the interest rate could account more for the fluctuations in agricultural price than the money supply.
    Keywords: Agricultural Price, FAVAR, Interest Rate, Money Supply, Demand and Price Analysis, Research Methods/ Statistical Methods, Q11, E69,
    Date: 2017–01–16
  14. By: Gabriele Camera (Economic Science Institute, Chapman University and WWZ, University of Basel)
    Abstract: The institution of money is rapidly evolving thanks to developments in computerbased cryptography. Technological advances have made possible the creation of cost-effective electronic alternatives to banknotes and coins, which are the traditional physical currencies. This document aims to describe — based on scientific literature — the use and characteristics of money, some of the problems associated with issuing a new currency or a new payment instrument, and the possible comparative advantages of a central bank in leading the way relative to private issuers.
    Date: 2016
  15. By: Douglas A. Irwin
    Abstract: The collapse of the gold standard in the 1930s sparked a debate about the merits of fixed versus floating exchange rates. Yet the debate quickly vanished: there was almost no discussion about the exchange rate regime at the Bretton Woods conference in 1944 because John Maynard Keynes and Harry Dexter White agreed that exchange rate stability through fixed but adjustable pegs was the right approach. In light of the difficult macroeconomic tradeoffs experienced under the gold standard a decade earlier, the outright rejection of floating exchange rates seems surprising. This paper explores the views of leading economists about the exchange rate provisions in the Bretton Woods agreement and examines why arguments for floating exchange rates were so quickly dismissed.
    JEL: B22 F31 F33
    Date: 2017–01
  16. By: Works, Richard Floyd
    Abstract: Numerous researchers have studied the connection between exchange rate fluctuations and macroeconomic variables for various market economies. Few studies, however, have addressed whether these relationships may differ based on the market classification of the given economy. This study examined the impact on exchange rates for Japan (a proxy for developed economies) and South Korea (a proxy for emerging economies) yielding from the macroeconomic variables of the sticky-price monetary model between February 1, 1989 and February 1, 2015. The results show that money supply and inflation constituted a significant, but small, influence on South Korean exchange rate movements, whereas no macroeconomic variable within the model had a significant impact on Japanese exchange rates fluctuations. The results of the autoregressive error analyses suggest small variances in the affect that macroeconomic variables may have on developed versus emerging market economies. This may provide evidence that firms may use similar forecasting techniques for emerging market currencies as used with developed market currencies.
    Keywords: Developed economies, Emerging economies, Exchange rates, Sticky-price
    JEL: F31 F37
    Date: 2016–12–31
  17. By: Christian Gillitzer (Reserve Bank of Australia); Angus Moore (Reserve Bank of Australia)
    Abstract: We use disaggregated trade data to estimate whether the currency in which imports are invoiced affects the pass-through of exchange rate changes to import prices. We estimate first-stage pass-through to be only around 14 per cent after two years for imports invoiced in Australian dollars, which is quantitatively important given that this accounts for about 30 per cent of imports. In contrast, first-stage pass-through for foreign currency-invoiced imports is immediate and complete. These results are likely to reflect foreign exporters with low desired pass-through choosing to invoice in Australian dollars. Our results have several important implications. First, Australian dollar invoicing dampens the response of importers' costs to exchange rate changes and so may make consumer price inflation less responsive to exchange rate changes, increasingly so if Australian dollar invoicing becomes more prevalent. Second, import price models that impose the law of one price are likely to be unsuitable, at least over relatively short-run periods. Third, invoice-share-weighted exchange rate indices should be preferable to trade-share-weighted exchange rate indices for modelling import price changes, although the empirical evidence on this is weak. Finally, exogenous changes in the exchange rate might have persistent effects on the goods terms of trade.
    Keywords: exchange rates; import prices; pass-through; invoicing currency
    JEL: E31 F14 F31
    Date: 2016–06
  18. By: Economou, Emmanouel/Marios/Lazaros; Kyriazis, Nikolaos
    Abstract: In the aftermath of the UK referendum on 23 June, 2016 that resulted in a sonorous negative decision regarding the willingness of the British people to remain in the EU, a significant number of alarming questions have emerged. Although Europe should have forged in crises, nowadays, many compromises have to be made in order to maintain the European construction as intact as possible. The question we attempt to answer is whether a new phase of unconventional monetary policy in the form of QE would be appropriate to lessen the threat of an upcoming crisis. This is why we examine Eurozone QE perspectives through the prism of the new without the UK era of the EU in order to highlight the pros and cons of the historical Brexit decision. As new rounds of unconventional monetary policy are believed to be essential for supporting the weaker countries in the European south, perspectives of non-conventional success could alter and optimal policies be substantially reformulated subject to the newly-arising constraints.
    Keywords: Brexit, European Union, Quantitative Easing, Eurozone
    JEL: E02 E51 E52 E58 G2 H1
    Date: 2016–09–21
  19. By: Stavrakeva, Vania (London Business School); Tang, Jenny (Federal Reserve Bank of Boston)
    Abstract: In this paper, we confront the data with the financial markets folk wisdom that an increase in a yield or forward rate of country i relative to j is associated with a contemporaneous appreciation of currency i. We find that while the folk wisdom prior to 2009:Q1 holds fairly well for all maturities and three major currency bases, the “coefficient curve” twisted during the zero-lower-bound period so that the relationship became stronger at the short end but weaker and even of the opposite sign at the long end of the curve. We attribute the structural breaks at the short end of the curve to a change in the relationship between expected excess currency returns and changes in relative yields/forwards. The breaks at the long end of the curve can be explained by changing relationships between yields/forwards and the part of exchange rate fluctuations due to changes in expectations over future short-term rates and long-run relative price levels. Alternatively, the twist of the coefficient curve can be attributed to the changing relationship between the exchange rate and the expectation hypothesis component of yields/forwards at the short end and the term premium component at the long end.
    JEL: G15
    Date: 2016–04–14
  20. By: Ennis, Huberto M. (Federal Reserve Bank of Richmond)
    Abstract: I study the implications for central bank discount window stigma of the model by Philippon and Skreta (2012). I take an equilibrium perspective for a given discount window program instead of following the program-design approach of the original paper. This allows me to narrow the focus on the model's positive predictions. In the model, firms (banks) need to borrow to finance a productive project. There is limited liability and firms have private information about their ability to repay their debts. This creates an adverse selection problem. The central bank can ameliorate the impact of adverse selection by lending to firms. Discount window borrowing is observable and it may be taken as a signal of firms' credit worthiness. Under some conditions, firms borrowing from the discount window may pay higher interest rates to borrow in the market, a phenomenon often associated with the presence of stigma. I discuss these conditions in detail and what they suggest about the relevance of stigma as an empirical phenomenon.
    Keywords: Banking; Federal Reserve; Central Bank; Policy; Lender of last resort
    JEL: E51 E58 G21 G28
    Date: 2017–01–09
  21. By: Demirguc-Kunt, Asli; Horvath, Balint; Huizinga, Harry
    Abstract: This paper uses loan-level data from 124 countries over 1995–2015 to examine the transmission of monetary policy through the cross-border syndicated loan market. The results show that the expansion of monetary policy increases cross-border credit supply especially to weaker firms. However, greater foreign bank presence in the borrower country appears to reduce the potentially destabilizing impact of lower policy interest rates on cross-border lending, as it attenuates increases in loan volume and maturity while magnifying increases in collateralization and covenant use. The mitigating effect of foreign banking presence in the borrowing country on the transmission of monetary policy is robust to controlling for borrower-country economic and financial development, and a range of borrower and lender country policies and institutions, including the strength of bank regulation and supervision, exchange rate flexibility, and restrictions on capital flows. The findings qualify the characterization of international banks as sources of credit instability, and suggest that foreign bank entry can improve the stability of cross-border credit in the face of international monetary policy shocks.
    Keywords: Bank Regulation; Banking FDI; capital controls; Cross-border lending; Monetary Transmission
    JEL: E44 E52 F34 F38 F42 G15 G20
    Date: 2017–01
  22. By: Jean-Sébastien Fontaine; James Hately; Adrian Walton
    Abstract: This paper investigates how a low or negative overnight interest rate might affect the Canadian repo markets. The main conclusion is that the repo market for general collateral will continue to function effectively. However, changes to market conventions—such as the introduction of a charge for settlement fails—or other institutional changes may be required so that the repo market for specific collateral continues to support liquidity on the secondary market for government bonds. The historical experience shows that the special repo market in other jurisdictions can function effectively even if the overnight rate is negative. Closer examination suggests what specific circumstances can lead to persistent settlement fails in the specific collateral repo market. Specifically, the combination of (i) low or negative interest rates, (ii) large aggregate short positions in bonds, and (iii) economic or policy surprises may lead to persistent settlement fails.
    Keywords: Financial markets, Interest rates, Market structure and pricing
    JEL: D4 G10 G12
    Date: 2017
  23. By: Gianni La Cava (Reserve Bank of Australia); Helen Hughson (Reserve Bank of Australia); Greg Kaplan (Reserve Bank of Australia)
    Abstract: We explore whether changes in interest rates affect household consumption by changing the amount of cash that households have to spend – the household cash flow channel of monetary policy. Based on a panel of Australian households, we find that, when interest rates decline, the cash flows and durable goods spending of households with variable-rate mortgage debt increases relative to comparable fixed-rate borrowers. This is consistent with a 'borrower' cash flow channel. We also find that lower interest rates reduce the cash flows available to households that receive interest on bank deposits and that this, in turn, is associated with lower spending by these households. This is consistent with a 'lender' cash flow channel. Overall, the borrower channel is a stronger channel of monetary transmission than the lender channel, such that lower interest rates will typically increase household cash flows and lead to higher spending in aggregate. The central estimates imply that lowering interest rates by 100 basis points would be associated with an increase in aggregate household expenditure of about 0.1 to 0.2 per cent per annum. Overall, the household cash flow channel appears to be an important channel of monetary transmission in Australia.
    Keywords: cash flow; consumption; liquidity constraints; monetary policy; mortgage debt
    JEL: D31 E21 E52
    Date: 2016–12
  24. By: Adigozalov, Shaig; Huseynov, Salman
    Abstract: The CBAR plans to make a transition from the current peg regime where exchange rate acts as a “nominal anchor” to an inflation targeting (IT) regime. All leading central banks which adhere to an IT regime adopt a respective operational framework consistent with the announced monetary regime. Unfortunately, in compared to the transmission mechanism of the monetary policy which is under the spotlight, operational frameworks are not that much illuminated. This study explores a relatively “least conspicuous facet” of monetary policy, mainly focusing on experiences of various leading central banks. In addition, this paper analyzes the current operational framework of the Bank, pointing out the constraints and proposes several recommendations on how to adopt a proper operational framework for the new regime.
    Keywords: Inflation Targeting, operational framework, monetary transmission
    JEL: E42 E43 E52 E58
    Date: 2015–05–22

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