How do countries choose their monetary policy frameworks?

David Cobham, Mengdi Song

Research output: Contribution to journalArticle

Abstract

This paper investigates the determinants of countries’ choices of monetary policy framework. A brief narrative focused on groupings of countries motivates an econometric analysis which draws on previous work on the determinants of exchange rate regimes, bringing in standard factors as well as the trade networks of potential anchor currency blocs and the financial market depth that are emphasised in the narrative. The model turns out to be able to predict three quarters of countries’ choices, and there is no obvious systematic pattern in the errors. The results have important implications for how countries should choose their monetary policy frameworks.

Original languageEnglish
JournalJournal of Policy Modeling
Early online date25 Jun 2020
DOIs
Publication statusE-pub ahead of print - 25 Jun 2020

Keywords

  • Discretion
  • Exchange rate targets
  • Financial market depth
  • Inflation targets
  • Monetary policy frameworks
  • Trade networks

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'How do countries choose their monetary policy frameworks?'. Together they form a unique fingerprint.

  • Cite this