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Estimating a monetary policy reaction function for the dominican republic

José Sánchez-Fung

International Economic Journal, 2005, vol. 19, issue 4, 563-577

Abstract: The paper specifies and estimates a hybrid McCallum-Taylor monetary policy reaction function for the Dominican Republic (DR). The estimated reactions suggest that the Central Bank of the DR has been biased towards targeting the exchange rate. These findings are in line with the evidence on the fear-of-floating characteristic of developing countries. An evaluation of the estimated rule's historical performance shows that monetary base growth below (above) that implied by the 'average' policy reaction is associated with better (worse) macroeconomic performance.

Keywords: Monetary policy reaction function; McCallum and Taylor rules; multiple exchange rates; Dominican Republic (search for similar items in EconPapers)
Date: 2005
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Working Paper: Estimating a Monetary Policy Reaction Function for the Dominican Republic (2002) Downloads
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DOI: 10.1080/10168730500382121

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