The role of monetary policy in the New Keynesian Model: Evidence from Vietnam
Hoang Van ()
Authors registered in the RePEc Author Service: Hoang Van Khieu ()
No wp1075, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan
This paper reproduces a version of the New Keynesian model developed by Ireland (2004) and then uses the Vietnamese data from January 1995 to December 2012 to estimate the model???s parameters. The empirical results show that before August 2000 when the Taylor rule was adopted more firmly, the monetary policy shock made considerable contributions to the fluctuations in key macroeconomic variables such as the short-term nominal interest rate, the output gap, inflation, and especially output growth. By contrast, the loose adoption of the Taylor rule in the period of post-August 2000 leads to a fact that the contributions of the monetary policy shock to the variations in such key macroeconomic variables become less substantial. Thus, one policy implication is that adopting firmly the Taylor rule could strengthen the role of the monetary policy in driving movements in the key macroeconomic variables, for instance, enhancing economic growth and stabilizing inflation.
Keywords: New Keynesian model; Monetary Policy; Technology Shock; Cost-Push Shock; Preference Shock. (search for similar items in EconPapers)
JEL-codes: E12 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-mac, nep-mon, nep-sea and nep-tra
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Journal Article: The Role of Monetary Policy in the New Keynesian Model: Evidence from Vietnam (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:wdi:papers:2014-1075
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