Abstract
In this paper we construct a new monetary policy indicator (MPI) for Jamaica. Further to the construction of this indicator, two variants of augmented VAR are estimated. These are the structural VAR and a variant of the fusion between VAR and the analytical narrative-approach (ANA); forming the ANA-VAR Hybrids, as proposed by Leeper (1997). The monetary policy structural VAR returns price and exchange rate puzzles, which disappears when MPI is modeled as an endogenous variable. We find that innovation to real money stock explains a relatively large proportion of total real income in the first 2 years, while innovation to real income explains a small proportion of real money balance. The former finding is consistent with the VAR literature while the later is inconsistent with monetary convention. Furthermore, We find that a monetary expansion depreciates the Jamaican dollar, which in turn impacts negatively on imports in the first 3 quarters of policy implementation. On average monetary stabilization policies contributed to economic stagnation in Jamaica over the review period.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: 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.
