This essay examines the choice of monetary policy instrument for a small open economy under flexible exchange rate regime with some reference to Indonesia. To approach the issue a simple ad-hoc aggregate supply-IS-LM model is used for the analysis. Although basically the issue concerning...

The paper outlines some alternative methodologies for estimating the monetary policy reaction function. It also discusses some of the advantages and disadvantages for each available alternative to be implemented in the case of small developing economies. Additionally, a simple case study using...

Lax monetary policy in the United States has been pointed out as one of the responsible factors behind the recent global crisis. Similar loose monetary conditions also prevailed in many European countries before the crisis and were argued to be among the accommodating factors behind the run-up...

In the postglobal financial crisis period, the central banks of the advanced economies pursued unconventional monetary policies, such as the United States (US) Federal Reserve's quantitative easing (QE). Those policies and their unwinding may significantly affect cross-border capital flows and...

Events surrounding the global financial crisis have brought to light the potential role of monetary policy in precipitating the crisis. Numerous studies on advanced economies have documented a significant negative relationship between interest rates and bank risk-taking. This paper also finds...

A potentially important side effect of quantitative easing(QE) by the United States (US) Federal Reserve System (the Fed) is the expansion of capital flows into developing countries. As a result, there is widespread concern that QE tapering may trigger financial instability in those countries....

Lax monetary policy in the United States has been pointed out as one of the responsible factors behind the recent global crisis. Similar loose monetary conditions also prevailed in many European countries before the crisis and were argued to be among the accommodating factors behind the run-up...

This paper aims at identifying effective macroprudential policy (MPP) interventions and analysing the macroeconomic conditions that promote them. We define effective MPP interventions as those that stabilize its underlying target variable, such as credit growth, house price growth, etc. For our...