Rate-based Framework Research Articles

From a Quantity to an Interest Rate-Based Framework: Multiple Monetary Policy Instruments and Their Effects in China*

In moving from a quantity to an interest rate-based policy framework, the PBoC uses a variety of monetary policy instruments and intermediate targets, which is different from central banks of main industrial countries. Contrary to most studies on overall effects of monetary policy, this research empirically investigates the effects of various types of monetary policy instruments separately by modeling the interactions and relationship among monetary policy instruments and other monetary variables such as monetary policy targets, to draw implications forhighlight the PBoC’s attempt to change the monetary policy framework to an interest rate based framework. Empirical results suggest the effects of the changes in benchmark lending rates and short-term interest rates on loan, M2 and output are larger than those of the changes in reserve requirement ratio, especially in recent years. Non-policy shocks exert substantial effects on intermediate targets, such as loans and M2, under a quantity-based policy framework. These results may imply that monetary policy is more effective under a new interest rate-based policy framework than the old quantity-based policy framework. Empirical results also suggest that the size and effects of short-term interest rate shocks are larger in recent years, which shows the push by the PBoC to move from a quantity-based policy framework to an interest rate-based policy framework has progressed significantly. In addition, short-term interest rates have the strongest effect on property price, among various policy instruments. This could suggest that the PBoC’s interest rate based framework is likely more effective in achieving its financial stability objective. Overall, the empirical results support the idea that the new interest rate-based policy framework is more effective in achieving not only traditional macroeconomic objectives, but also new financial stability objectives.

Dynamic resource-allocation for congestion-control in high-speed LAN Interconnection

When an ATM network is used as a backbone interconnection medium for a set of legacy low-speed LANs, a congestion control scheme is required to protect destination LANs from the risk of congestion that might be created when multiple users attempt to simultaneously communicate with the same LAN. In this paper, we present a novel congestion-control scheme in which the rate-based and bandwidth advertisement approaches inter-operate to efficiently manage and protect destination resources. In this scheme, each destination LAN is connected to source LANs through a tree-based virtual path (VP) layout that is rooted at the destination and has the source LANs as leaves. Under the rate-based framework, fractions (quotas) of the destination bandwidth are periodically computed on a hop-by-hop basis for each VP. Quotas are based on the estimated average load on each VP link. At source LANs, these quotas are used to regulate the instantaneous transmission rate into the ATM network. The bandwidth advertisement framework on the other hand works end-to-end. It uses the destination LAN buffer to regulate quota migration from low activity LANs to the high activity ones depending on the total buffer occupancy, as well as the individual buffer occupancy per source LAN at the destination. The scheme uses simple calculations, which makes it suitable for real time implementation. The performance of the scheme is evaluated through computer simulation under several network parameters and traffic patterns. Results show that a near zero packet loss probability at the destination is achieved while attaining high resource utilization. The results also demonstrate the fairness of the proposed scheme.

Rate-based control schemes for ABR traffic — Design principles and performance comparison

A new ATM service category, the Available Bit Rate service, has been introduced in the ATM Forum. It dynamically allocates available bandwidth to users by controlling the flow of user traffic with feedback. The Forum has ratified the rate-based flow control framework for the support of this new service. In this paper, we provide a recipe for designing rate-based feedback schemes demonstrating the rich variety of available switch mechanisms. Each aspect of the feedback control loop mechanism is explored in detail and several available choices are investigated. Two example switch mechanisms are provided that illustrate the rate-based control design principles. The ability of these mechanims to support the desired objectives of an ABR service is compared using a reference network configuration. Simulation results show that the rate-based framework allows a great degree of architectural flexibility in the design of switch mechanisms. However, the explicit rate based approach is more capable than single bit feedback approaches in providing immediate access to available bandwidth in the presence of VBR sources. The rate-based framework provides switch vendors sufficient flexibility to choose a mechanism among several available options, based on their performance requirements and cost budges.