The Future of Monetary Policy: Roles of Financial Stability and Exchange Rate
Nuwat Nookhwun (),
Songklod Rastapana and
Additional contact information
Paiboon Pongpaichet: Bank of Thailand
Songklod Rastapana: Bank of Thailand
No 2010-07, Working Papers from Monetary Policy Group, Bank of Thailand
The impending change in the global economic and nancial landscape will have important implications for the making of monetary policy in Thailand. This paper highlights two key challenges and proposes steps that can help strengthen the existing in ation targeting (IT) framework. First, we anticipate a more powerful procyclicality mechanism, which will pose greater risk to nancial stability. A theoretical model is constructed to illustrate how such mechanism, in addition to propagating shocks, can generate bubble-and-crash phenomena. In this context, we argue that there are strong justi cations for augmenting the IT framework by rule-based macroprudential policy. Secondly, we study the role of exchange rate exibility in determining long-run sustainable growth. Through crosscountry panel regressions, we nd evidence that conditional on some criteria being met, greater exchange rate exibility is conducive to higher economic growth. We argue that Thailand is well-positioned to bene t from more exibility going forward, which in turn will help spur private sector's adjustments and ultimately ensure a more resilient Thailand.
Keywords: monetary policy; financial stability; macroprudential; exchange rate flexibility; exchange rate and growth (search for similar items in EconPapers)
JEL-codes: E44 E50 F31 (search for similar items in EconPapers)
Pages: 71 pages
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.bot.or.th/Thai/EconomicConditions/Publi ... per/dp072010_eng.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 NOT FOUND (http://www.bot.or.th/Thai/EconomicConditions/Publication/DiscussionPaper/dp072010_eng.pdf [301 Moved Permanently]--> https://www.bot.or.th/Thai/EconomicConditions/Publication/DiscussionPaper/dp072010_eng.pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bth:wpaper:2010-07
Access Statistics for this paper
More papers in Working Papers from Monetary Policy Group, Bank of Thailand Contact information at EDIRC.
Bibliographic data for series maintained by Pornpinun Chantapacdepong ().