Abstract
This paper estimates a nonlinear model of monetary policy reaction function by augmenting the standard Taylor rule equation for the case of Malaysia. M\netary policy reaction function is identified by which the BNM sets the current level ofpolicy rates after observing the current level ofoutput, inflation and exchange rate, and lags ofthesevariables (bachuard looking). (Jsing quarterly time series data set spanningfrom 1991 to 2014, thefindings support the relevance of Taylor rule in which the Bank Negara Malaysia (nNu) sets their policy rates based on both inflation and output growth. In addition, the BNM has also considered the exchange rate in their reactionfunction.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.