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Title: |
Estimating a Monetary Policy Reaction Function for the Dominican Republic |
| Author: |
José R. Sánchez-Fung |
| Author
Affiliation: |
Kingston University, Kingston-upon-Thames, UK |
| Source: |
International Economic Journal, December 2005, v. 19, no. 4, pp. 563-577 |
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Publication Date: |
December 2005 |
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Abstract: |
The paper specifies and estimates a hybrid McCallum-Taylor monetary policy reaction function for the Dominican Republic (DR). The estimated reactions suggest that the Central Bank of the DR has been biased towards targeting the exchange rate. These findings are in line with the evidence on the fear-of-floating that is so characteristic of developing countries. An evaluation of the estimated rule’s historical performance shows that monetary base growth below (above) that implied by the
‘average’ policy reaction is associated with better (worse) macroeconomic performance. |
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