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ESTIMATING MONETARY POLICY RULES FOR SOUTH AFRICA
Author(s) -
Knedlik Tobias
Publication year - 2006
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2006.00091.x
Subject(s) - monetary policy , economics , estimation , index (typography) , exchange rate , monetary hegemony , stability (learning theory) , monetary economics , interest rate , credit channel , econometrics , macroeconomics , inflation targeting , computer science , management , machine learning , world wide web
The paper combines the estimation of the Monetary Conditions Index (MCI) with the theoretic modelling of optimal monetary policy in South Africa. The idea that monetary policy is not only interested in optimal monetary conditions but also in external stability, provides the basis for the analysis. The paper introduces the concept of the MCI and estimates the relative influence of interest rates and exchange rates on the output gap. The estimated weights are 1.9:1. This estimation results is used to specify operating target rules for South African monetary policy.