A Monetary Policy Rule for Russia, or is it Rules?

26 Pages Posted: 17 Feb 2016  

Iikka Korhonen

Bank of Finland - Institute for Economies in Transition (BOFIT)

Riikka Nuutilainen

Bank of Finland - Institute for Economies in Transition (BOFIT)

Date Written: 2016

Abstract

We estimate several monetary policy rules for Russia for the period 2003–2015. We find that the traditional Taylor rule describes the conduct of monetary policy in Russia reasonably well, whether coefficients are restricted to being the same or allowed to change over the sample period. We find that the Bank of Russia often overshot its inflation target and that extensive overshooting is associated with large depreciations of the ruble, testifying to the importance of the exchange rate in the conduct of monetary policy in Russia.

Keywords: E31, E43, E52, P33, monetary policy rule, Taylor rule, McCallum rule, Russia, inflation

Suggested Citation

Korhonen, Iikka and Nuutilainen, Riikka, A Monetary Policy Rule for Russia, or is it Rules? (2016). BOFIT Discussion Paper No. 2/2016. Available at SSRN: https://ssrn.com/abstract=2733050

Iikka Korhonen (Contact Author)

Bank of Finland - Institute for Economies in Transition (BOFIT) ( email )

P.O.Box 160
Helsinki 00101
Finland

Riikka Nuutilainen

Bank of Finland - Institute for Economies in Transition (BOFIT) ( email )

Helsinki 00101
Finland

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