How do countries choose their monetary policy frameworks?

David Cobham and Mengdi Song

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the determinants of countries' choices of monetary policy framework (MPF). It uses a brief narrative focused on groupings of countries making similar choices to motivate an econometric analysis which also draws on previous work on the determinants of exchange rate regimes. That analysis brings in other more standard factors, as well as the trade networks of potential anchor currency blocs and the financial markets depth that are emphasised in the narrative. The model turns out to be able to predict three quarters of countries' choices of MPF, and there is no obvious systematic pattern in the errors.

Keywords: monetary policy frameworks; inflation targets; exchange rate targets; discretion; trade networks; financial market depth (search for similar items in EconPapers)
JEL-codes: E42 E52 E61 F40 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: How do countries choose their monetary policy frameworks? (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:99110

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