The implementation of monetary policy in an emerging economy: the case of Chile

Christian Johnson () and Rodrigo Vergara ()

Revista de Analisis Economico – Economic Analysis Review, 2005, vol. 20, issue 1, 45-62

Abstract: Central bank authorities base implementation of monetary policy on an analysis of multiple variables known as monetary policy indicators. In a small open economy such as Chile, these indicators may include inflation misalignments, unemployment, GDP growth, money growth, the current account balance, exchange rate volatility and international re-serves. A neural network approach is used to establish the correspond-ing weights considered by the Board of the Central Bank of Chile during the period 1995-2003. GDP growth and the difference between the actual and the target inflation were found to be among the variables of greatest weight in the monetary policy decision-making process of the Central Bank of Chile during this period.

Keywords: Monetary Policy; Neural Network (search for similar items in EconPapers)
JEL-codes: C45 E52 (search for similar items in EconPapers)
Date: 2005
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Working Paper: The Implementation of Monetary Policy in an Emerging Economy: The Case of Chile (2005)
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