Monetary Policy and External Factors: Empirical Evidence for Association of Southeast Asian Nations 3
The motivation for this paper is the external factors can be the important objectives of the monetary policy in a small open economy. This study will extend the standard Taylor rule that initially encompassed output and inflation by adding the exchange rate and terms of trade. By using the augmented...
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
EconJournals
2016-09-01
|
| Series: | International Journal of Economics and Financial Issues |
| Subjects: | |
| Online Access: | https://dergipark.org.tr/tr/pub/ijefi/issue/32045/354689?publisher=http-www-cag-edu-tr-ilhan-ozturk |
| _version_ | 1797921682839568384 |
|---|---|
| author | Pei-Tha Gan Nyuk-Ling Lee Mohd Yahya Mohd Hussin Norimah Rambeli |
| author_facet | Pei-Tha Gan Nyuk-Ling Lee Mohd Yahya Mohd Hussin Norimah Rambeli |
| author_sort | Pei-Tha Gan |
| collection | DOAJ |
| description | The motivation for this paper is the external factors can be the important objectives of the monetary policy in a small open economy. This study will extend the standard Taylor rule that initially encompassed output and inflation by adding the exchange rate and terms of trade. By using the augmented Taylor rule, this paper examines exchange rates and terms of trade and determines its empirical validity based on a sample of ASEAN-3 countries. Using the technique of unrestricted error correction model, the findings provide some policy implications; the uncertain movements of the exchange rate and terms of trade can be fine-tuned by the central bank’s interest rate instrument, and the inflation and output are useful policy indicators for monetary decision making of central bank, which eventually promotes the best economic outcomes. |
| first_indexed | 2024-04-10T14:20:28Z |
| format | Article |
| id | doaj.art-3c2e8311fac847f3aab1907434b37e9e |
| institution | Directory Open Access Journal |
| issn | 2146-4138 |
| language | English |
| last_indexed | 2024-04-10T14:20:28Z |
| publishDate | 2016-09-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Economics and Financial Issues |
| spelling | doaj.art-3c2e8311fac847f3aab1907434b37e9e2023-02-15T16:09:20ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382016-09-0164158515901032Monetary Policy and External Factors: Empirical Evidence for Association of Southeast Asian Nations 3Pei-Tha GanNyuk-Ling LeeMohd Yahya Mohd HussinNorimah RambeliThe motivation for this paper is the external factors can be the important objectives of the monetary policy in a small open economy. This study will extend the standard Taylor rule that initially encompassed output and inflation by adding the exchange rate and terms of trade. By using the augmented Taylor rule, this paper examines exchange rates and terms of trade and determines its empirical validity based on a sample of ASEAN-3 countries. Using the technique of unrestricted error correction model, the findings provide some policy implications; the uncertain movements of the exchange rate and terms of trade can be fine-tuned by the central bank’s interest rate instrument, and the inflation and output are useful policy indicators for monetary decision making of central bank, which eventually promotes the best economic outcomes.https://dergipark.org.tr/tr/pub/ijefi/issue/32045/354689?publisher=http-www-cag-edu-tr-ilhan-ozturkexchange rate monetary policy taylor rule terms of trade |
| spellingShingle | Pei-Tha Gan Nyuk-Ling Lee Mohd Yahya Mohd Hussin Norimah Rambeli Monetary Policy and External Factors: Empirical Evidence for Association of Southeast Asian Nations 3 International Journal of Economics and Financial Issues exchange rate monetary policy taylor rule terms of trade |
| title | Monetary Policy and External Factors: Empirical Evidence for Association of Southeast Asian Nations 3 |
| title_full | Monetary Policy and External Factors: Empirical Evidence for Association of Southeast Asian Nations 3 |
| title_fullStr | Monetary Policy and External Factors: Empirical Evidence for Association of Southeast Asian Nations 3 |
| title_full_unstemmed | Monetary Policy and External Factors: Empirical Evidence for Association of Southeast Asian Nations 3 |
| title_short | Monetary Policy and External Factors: Empirical Evidence for Association of Southeast Asian Nations 3 |
| title_sort | monetary policy and external factors empirical evidence for association of southeast asian nations 3 |
| topic | exchange rate monetary policy taylor rule terms of trade |
| url | https://dergipark.org.tr/tr/pub/ijefi/issue/32045/354689?publisher=http-www-cag-edu-tr-ilhan-ozturk |
| work_keys_str_mv | AT peithagan monetarypolicyandexternalfactorsempiricalevidenceforassociationofsoutheastasiannations3 AT nyuklinglee monetarypolicyandexternalfactorsempiricalevidenceforassociationofsoutheastasiannations3 AT mohdyahyamohdhussin monetarypolicyandexternalfactorsempiricalevidenceforassociationofsoutheastasiannations3 AT norimahrambeli monetarypolicyandexternalfactorsempiricalevidenceforassociationofsoutheastasiannations3 |