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economic stability and the central bank: rule or discretion


ISC (13 صفحه - از 121 تا 133)

کلید واژه های ماشینی : Gross Domestic Product، Inflation Targeting Monetary Policy Rule، McCallum، GDP، The Demand Money، Taylor McCallum، Monetary Policy، This McCallum، The Lags Effect Monetary Policy، Journal Political Economy

The history of monetary policy in Iran, judging by their performance in keeping the value of the currency, maintaining a steady growth in the Gross Domestic Product, faltering investment, show that monetary policy has not been a portrait of consistent successes, to say the least. As a result of the recent studies two rules have emerged as guideline for policy makers: Taylor rule and McCallum rule. This study finds using the McCallum rule for monetary policy improves its outcome.

خلاصه ماشینی: "Taylor rule requires the central bankers to adjust the nominal interest rate in response to the observed or predicated values of inflation rate and the percentage difference between actual output and its full-employment trend value (potential or capacity GDP). edu set the monetary base in reaction to the changes in the nominal GDP, average growth rate in the base velocity of money, and the deviation in the actual GDP and its potential level. Tanner (1969) and Hamburger (1971) devoted much attention to the lag structure of monetary policy while Tucher (1966), Howrey (1969), Moore (1963), Svensson (1999), McCallum (1987 and 2000), Taylor 1993 and 1999) Stuart (1996) spent much of their analysis on different theoretical and empirical issues related to rules versus discretion in monetary policy. Therefore since the central bank has a greater short term and long term control over the monetary base and it has high correlation with the target variable, nominal income, it is a better candidate as the monetary instrument. Inflation rate (DLCPI) is a function of rate of changes in the import price level (DLIMP), growth rates of real income (DLY), and the rates of changes in the monetary base (DLMRES). Second, given the limited usefulness of monetary policy in directing and influencing the real variables of the economy such as real output of goods and services and employment in the long run, the central bank must be directed to strive in achieving the only one objective that it does have much control over; price stability."

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