Money Targeting in a Modern Forecasting and Policy Analysis System : an Application to Kenya /

We extend the framework in Andrle and others (2013) to incorporate an explicit role for money targets and target misses in the analysis of monetary policy in low-income countries (LICs), with an application to Kenya. We provide a general specification that can nest various types of money targeting (...

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Bibliografiske detaljer
Hovedforfatter: Andrle, Michal
Andre forfattere: Berg, Andrew, Berkes, Enrico, Portillo, Rafael
Format: Tidsskrift
Sprog:English
Udgivet: Washington, D.C. : International Monetary Fund, 2013.
Serier:IMF Working Papers; Working Paper ; No. 2013/239
Online adgang:Full text available on IMF
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100 1 |a Andrle, Michal. 
245 1 0 |a Money Targeting in a Modern Forecasting and Policy Analysis System :   |b an Application to Kenya /  |c Michal Andrle, Andrew Berg, Enrico Berkes, Rafael Portillo. 
264 1 |a Washington, D.C. :  |b International Monetary Fund,  |c 2013. 
300 |a 1 online resource (44 pages) 
490 1 |a IMF Working Papers 
500 |a <strong>Off-Campus Access:</strong> No User ID or Password Required 
500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a We extend the framework in Andrle and others (2013) to incorporate an explicit role for money targets and target misses in the analysis of monetary policy in low-income countries (LICs), with an application to Kenya. We provide a general specification that can nest various types of money targeting (ranging from targets based on optimal money demand forecasts to those derived from simple money growth rules), interest-rate based frameworks, and intermediate cases. Our framework acknowledges that ex-post adherence to targets is in itself an objective of policy in LICs; here we provide a novel interpretation of target misses in terms of structural shocks (aggregate demand, policy, shocks to money demand, etc). In the case of Kenya, we find that: (i) the setting of money targets is consistent with money demand forecasting, (ii) targets have not played a systematic role in monetary policy, and (iii) target misses mainly reflect shocks to money demand. Simulations of the model under alternative policy specifications show that the stronger the ex-post target adherence, the greater the macroeconomic volatility. Our findings highlight the benefits of a model-based approach to monetary policy analysis in LICs, including in countries with money-targeting frameworks. 
538 |a Mode of access: Internet 
700 1 |a Berg, Andrew. 
700 1 |a Berkes, Enrico. 
700 1 |a Portillo, Rafael. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2013/239 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2013/239/001.2013.issue-239-en.xml  |z IMF e-Library