A measure of monetary conditions

Richard Dennis

No G97/1, Reserve Bank of New Zealand Discussion Paper Series from Reserve Bank of New Zealand

Abstract: This paper explains why the overall stance of monetary policy is effected by both interest rates and the exchange rate, and hence why a Monetary Conditions Indicator can provide useful information about the stance of policy. Three output gap equations estimated in this paper reveal that the real interest rate and the real exchange rate both affect excess demand but that the real interest rate is the more powerful and faster acting policy transmission channel.

JEL-codes: C22 C52 E58 (search for similar items in EconPapers)
Pages: 17p
Date: 1997-01
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:nzb:nzbdps:1997/01

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