Abstract
This paper characterizes the monetary policy rules used by the State Bank of Vietnam in the post-1992 period. Rather than following a Taylor-type interest-rate rule, the SBV appears to have followed a McCallum rule, adjusting monetary growth in response to the price level, the exchange rate, and the difference between the world price of gold and the price of gold in Vietnam at the official exchange rate. When this policy-rule is incorporated into a structural vector-autoregression (SVAR), shocks to the gold-price gap are also found to be valuable for explaining changes in the domestic price level and exchange rate. Thus, given Vietnam's unique institutional, cultural and historical circumstances, the gold price gap has been a valuable indicator for the successful implementation of monetary and exchange rate policies.
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