Forward-Looking Interest Rate Rules as a Tool for Central Bank Watching

2001 ◽  
Author(s):  
Luca Lotti
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Interest Rate Rules ◽  
Forward Looking

Money Supply Rules and Interest Rate Rules

2020 ◽  
pp. 77-82
Author(s):  
Harold L. Cole
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Money Supply ◽  
Policy Rule ◽  
Interest Rate Rules

In this chapter we introduce various formulations of central bank policy rule consider their implications within the context of our model. We introduce preference shocks to our model to create a motivation for smoothing by the central bank.

MACROECONOMIC (IN)STABILITY OF INTEREST RATE RULES IN A MODEL WITH BANKING SYSTEM AND RESERVE MARKETS

2014 ◽  
Vol 19 (7) ◽  
pp. 1476-1508 ◽  
Author(s):  
Shu-Hua Chen
Keyword(s):  
Interest Rate ◽  
Discrete Time ◽  
Equilibrium Model ◽  
Banking System ◽  
Interest Rate Rules ◽  
Active Rules ◽  
Monetary Policies ◽  
Physical Investment ◽  
Monetary Rules ◽  
Forward Looking

This paper develops a general equilibrium model with a banking system and a reserves market and shows that (i) the macroeconomic stabilizing properties of the nominal interest rate rules change quite substantially when we move from a model without a banking system to one with a banking system and a reserves market; (ii) the interplay between fiscal and monetary policies, in particular inflation-indexed versus non-indexed bonds, is crucial in determining the macroeconomic stabilizing properties of monetary rules; (iii) active rules and passive rules perform equally in regard to their macroeconomic stabilizing properties; (iv) continuous- and discrete-time specifications deliver the same/different (in)determinacy results for both the labor-only model and the endogenous-capital model under forward-looking/current-looking rules; (v) the inclusion of physical investment narrows the indeterminacy region under forward-looking rules; and (vi) current-looking rules make equilibrium determinacy impossible for both the labor-only economy and the endogenous-capital economy. Economic intuitions are provided.

Dynamics of Monetary Policy in Kenya

2021 ◽  
pp. 281-303
Author(s):  
Esman Nyamongo ◽  
Isaya Maana ◽  
Anne Kamau
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Central Bank ◽  
Detailed Analysis ◽  
Inflation Targeting ◽  
50Th Anniversary ◽  
Historical Events ◽  
Policy Practice ◽  
The Interest Rate ◽  
Forward Looking

This chapter provides a chronicle of monetary policy phases and outcomes in Kenya since the establishment of the Central Bank of Kenya in 1966. After detailed analysis of historical events and data spanning 50 years, it is found that monetary policy has evolved from an era of rudimentary monetary policy practice, a backward-looking monetary policy to a regime that is forward-looking, best characterized as transitioning to inflation targeting. During the 50 year journey, the Bank has made major milestones in the formulation of monetary policy. However, the interest rate capping law that came into force in September 2016, as the Bank celebrated its 50th anniversary, posed a threat to the achievements. The Central Bank was keen on having it repealed and this was attained in November 2019.

scholarly journals News Shocks and Optimal Simple Rules

2011 ◽  
Vol 62 (1) ◽  
pp. 1-11 ◽  
Author(s):  
Roland C. Winkler ◽  
Hans-Werner Wohltmann
Keyword(s):  
Interest Rate ◽  
Basic Principle ◽  
News Shocks ◽  
Interest Rate Rules ◽  
Policy Rules ◽  
Control Rule ◽  
Simple Rules ◽  
Forward Looking

SummaryThis paper evaluates the performance of optimal simple policy rules in the presence of news shocks. It is shown that the inclusion of forward-looking elements enhances the performance of simple optimized interest rate rules when agents learn about future disturbances in advance. We provide a rationale for this result by demonstrating that, if shocks are news shocks, the optimal unrestricted control rule under commitment contains as a basic principle a forward-looking element.

Sign in / Sign up

Export Citation Format

Share Document