The Philippine Central Bank's Monetary Policy Reaction Function from 1992 to 2003
John Michael Ian S Salas
University of California, Irvine - Department of Economics; Philippine Institute for Development Studies; University of the Philippines School of Economics
May 1, 2004
Philippine Review of Economics, Vol. XLIII, No. 2, December 2006
This paper attempts to provide an empirical determination of the Philippine central bank's (BSP) recent monetary policy stance, before and after its adoption of the inflation targeting framework, as revealed by its interest rate setting behavior. Employing Clarida, Gali, and Gertler's (1998, 2000) forward-looking model, it finds that the BSP has indeed been stabilizing inflation by and large through its key policy rate, though it appears to be accommodative with respect to the output gap. In addition, currency stability and expansionary money supply (M1) growth are other concerns of the BSP, though significantly so only in earlier periods.
Number of Pages in PDF File: 26
Keywords: monetary policy, inflation, interest rates, inflation targeting, macroeconomics, central bank, Taylor rule, stabilization, Philippines, BSP, forward-looking
JEL Classification: E52, E58working papers series
Date posted: April 21, 2007 ; Last revised: December 23, 2007
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