Discretion of the Monetary Policy: An Exemplification with Bolivia
Discretion of the Monetary Policy: An Exemplification with Bolivia
Author(s): Roger Alejandro Banegas Rivero, Victor Hugo Ramirez Lavalle, Sacnicté Valdez del RíoeSubject(s): Economy, National Economy, Public Finances
Published by: Editura Universităţii »Alexandru Ioan Cuza« din Iaşi
Keywords: monetary policy; inflation; output gap; open market operations; elasticity; generalized moments;
Summary/Abstract: In this paper, we evaluate and quantify the role of the discretion of the monetary policy in an open small and open economy (the case of Bolivia). The results suggest that conventional instruments of the Central Bank respond in different ways: interest rates present a sensitive/elastic response to output gap (actual economic cycle) [1.8]; an inelastic mechanism to inflation [0.5]. On the other hand, open market operations in the Central Bank responds elastically to inflation [1.2] and insensible to the output gap. These results are robust to alternative specification utilizing the Generalized Method of moments (GMM), for the quarterly period from 2000(T1)-2015(T4).
Journal: Scientific Annals of Economics and Business
- Issue Year: 66/2019
- Issue No: 1
- Page Range: 101-115
- Page Count: 15
- Language: English