The New Zealand approach to rules and discretion in monetary policy

Article Abstract:

The Reserve Bank of New Zealand decided in 1989 to adopt a legislative framework for the achievement of price stability and long term financial growth. The move, ordained by the Reserve Bank of New Zealand Act of 1989, was made on the basis that price, output variability and economic expectations draw implications on policy reaction functions. Under the modified framework, a tightly constructed target rule is provided and discretion over instrument choice exists. Further, it discourages the adoption of short-run output monetary systems while confining objective consideration of output and employment.

Currency Stabilization Programs, New Zealand, Currency stabilization, Reserve Bank of New Zealand

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Monetary targeting in Germany: the stability of monetary policy and of the monetary system

Article Abstract:

Deutsche Bundesbank of Germany has successfully reaped the benefits of the adoption of a simple and transparent method for deriving annual monetary targets. Since its implementation in 1985, the framework proved instrumental in establishing stability, not only in terms of monetary policy strategy but in institutional system of instruments as well. Such instances negated the validity of Goodhart's Law, which experts believe as the ultimate cause of intermediate monetary targeting failure in other central banks.

Germany, Central banks, Deutsche Bundesbank

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Endogenous trade policy and the gains from international financial markets

Article Abstract:

The relationship between endogenous trade policy and international financial markets was analyzed using an econometric model. The model features benevolent national governments that choose a level of protection to maximize domestic welfare, and this level of protection is determined in a Nash equilibrium of tariff game. It was shown that financial markets affect the outcome of the trade policy decision when the policy is set endogenously in strategic interaction between governments.

Financial Services, Finance and Insurance, Trade Regulations NEC, Econometrics & Model Building, Models, Econometrics, Financial markets, Trade policy, International trade regulation, Commercial policy, Business models

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