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Title: Essays on monetary policy : formulation and implementation of monetary policy rules
Author: Malik, Ali Khalil
Awarding Body: University of Manchester
Current Institution: University of Manchester
Date of Award: 2006
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Monetary Policy Economics has grown substantially over the recent years. The presentation of a simple monetary policy rule by Professor John Taylor stimulated an enormous amount of research on monetary policy and in particular on the formulation and implementation of the monetary policy rules. Economists have evaluated monetary policy rules and regimes i.e. their feasibility, viability etc. from various dimensions. However research on many of the issues related to monetary policy is still pending. This thesis is organized in the form of a series of essays on monetary policy. This particular field of economics is so dynamic that adhering to a single model or topic for the completion of one's thesis may not prove to be very fruitful. Models and topics intensively examined by researchers have changed rapidly over the recent years. We now no longer see the ad hoc econometric models (which were frequently used in the past) for the evaluation of the monetary policy rules. To keep up with the existing literature and also to examine monetary policy from more than one dimension, I decided to organize this thesis as a collection of essays. I evaluate various monetary policy rules in these essays using simulations, empirical estimation etc. In the context of a closed economy (using simulations) in one essay I examine the viability and preferability of the Taylor rule, nominal income targeting rules and inflation targeting rules. In another two essays in the same context I examine the performance of the monetary policy rules in response to fiscal and asset price bubble shocks. In the open economy context (using simulations) I examine the performance of domestic/CPI inflation targeting rules. In another essay for a closed economy I use a mixture of (empirical) estimation and simulation for examining the impact of shocks in an inflation targeting regime. The essays which are exclusively empirical in nature include one in which I examine the preferences of the policy makers (in terms of the policy regimes) using regime switching policy rules. Another paper in the same category examines the effectiveness of inflation targeting in the UK using a VAR framework. In an open economy context I examine the optimal policy rules in a small estimated macro-econometric model. In a multi-country setting a short paper examines the policy rules (using simulations only) in a two country framework. A final essay examines the determinacy and E-stability of the equilibrium under the Taylor rule and the nominal income targeting rule in a New Keynesian framework. Most of the essays in the thesis utilize some sort of a small dynamic general equilibrium framework for the evaluation of the policy rules. Each essay is designed to be independent from every other essay, so as to be individually accessible to the reader. I very much hope that the essays prove to be useful contributions to the existing literature on monetary policy and will help in stimulating further research on monetary policy.
Supervisor: Duffy, Martyn Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available