Using cointegration and error-correction models, this report examines the relative influences of the monetary, labour and foreign sectors on Polish inflation from 1990 to 1999. After the development of a theoretical framework, we make use of a structural system technique wherein cointegration
In this document, we model provincial inflation in China in the reform period. Particularly, we’re excited about the potential of the hybrid New Keynesian Phillips Curve (NKPC) to capture the inflation process at the provincial level. The research illustrates variations in inflation
The possible participation of Finland in the Stage III of the European Monetary Union would constitute a major change in the operating environment of the Finnish economy. As a member of the common currency area, Finnish interest and exchange rates would no longer be determined by domestic monetary policy or domestic financial market reactions, but would instead be given by the European Central Bank and the European financial markets.
The monetary policy affects the economy through the LM-relation. When money supply changes, the interest rate and aggregate demand also change. The main objective of this paper is to empirically analyze and quantify the effect of changes in the supply of bank credit
After a period of convergence in the early and mid-1990s, the euro area economies may have started diverging. As a consequence, the common monetary policy could become well-suited for a number of countries. This paper discusses the extent and severity of the
The study deals with the international transmission of economic shocks, their consequences for exchange rates and the reconciliation of exchange rate management with monetary policy. The theoretical part of the study consists of a mainstream model of two large, interdependent economies with
This study is concerned with the determinants of monetary policy in the ERM countries. We derive a monetary policy rule, an interest rate rule, from a minimization problem faced by the central bank. The loss function trades off costs of interest rate
This paper analyses the prerequisites for and the results of unanimous monetary policy decisions in a monetary union consisting of heterogeneous members. The analysis is based on a multicountry version of Rogoff’s model of the determination of monetary policy in the presence
Within a New Keynesian business cycle model, we study variables that are normally unobservable but are very important for the conduct of monetary policy, namely expected inflation and inflation risk premia. We solve the model using a third-order approximation that allows us
Using information from a variety of sources, including our own estimates from quarterly data for each of the countries over the period 1972–1997, this paper suggests that the exchange rate will play an important role in the transmission of the impact of