Tracing the Monetary Policy Reaction Functions for the Case of a Small Developing Economy

Arief Ramayandi ()

No 200301, Working Papers in Economics and Development Studies (WoPEDS) from Department of Economics, Padjadjaran University

Abstract: The paper outlines some alternative methodologies for estimating the monetary policy reaction function. It also discusses some of the advantages and disadvantages for each available alternative to be implemented in the case of small developing economies. Additionally, a simple case study using Indonesia’s data set was carried out. The result indicates that an estimated simple backward-looking reaction function is capable of capturing the path of policy instrument variable quite well.

Keywords: Monetary policy; small open economy (search for similar items in EconPapers)
JEL-codes: E5 (search for similar items in EconPapers)
Date: 2003-10, Revised 2003-10
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Persistent link: http://EconPapers.repec.org/RePEc:unp:wpaper:200301

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