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Institutional
Structure for Monetary Policy: A Comparative Assessment
of Ten Central Banks
-- Jiji
T Mathew
The
main objective of this article is to evaluate the institutional
quality of ten central banks. The countries included for
this study are New Zealand, the United Kingdom, the United
States of America, Germany, Chile, Indonesia, South Korea,
Thailand, Hong Kong and India. The central banks of these
countries exhibit many disparities and similarities in their
monetary regimes which provide ample scope for their analysis
and evaluation. The analysis of the institutional experiences
of other central banks offers rich lessons to India in pursuing
its central bank reforms. This study reveals that almost
all the central banks, with the exception of Indonesia and
India, exhibit high standards of institutional quality in
terms of balancing independence, transparency and accountability.
The Central Bank (CB) models of the United Kingdom and New
Zealand stand first in the world in this regard, closely
followed by the United States and Chile.
©
2006 IUP . All Rights Reserved.
Countries
in Transition and Monetary Policy: A Framework for Policy
Development
-- Stanley
C W Salvary
While
economies in transition are not devoid of their monetary
policy models, the changes desired in the functioning of
these economies may necessitate innovations to administer
monetary policy models that are consistent with the newly
established goals. Although some goals may essentially be
the same (e.g., full employment or price stability), the
instruments for achieving those goals may not be available.
The variety of approaches to a monetary policy are presented
in this article. However, while several operating models
are discussed, it is made clear that the approach adopted
by an economy in transition has to be consistent with the
institutional structures in place. The recommended path
for policymaking begins with an assessment of the institutional
setting and the economic philosophy of the country in transition.
This is followed by an information approach which focuses
on the objectives and goal variables, monetary policy models,
the effect of changing conditions, the role of central banks,
integration of monetary and fiscal policies, institutional
design for monetary stability, alternative model variables,
implications of monetarism, and a concluding caveat on monetary
control.
©
2006 IUP . All Rights Reserved.
Deflation,
Recession and Slowing Growth: Finding the Empirical Links
-- Federico
Guerrero and Elliott Parker
Does
price deflation cause recession? Though deflation has become
a matter of concern for the Federal Reserve, recent studies
suggest that the historical and causal record is mixed.
In this article, the authors use historical data for the
output and price level of the United States of America,
and find that a simple Granger causality approach confirms
the doubts about the effect. A closer look, however, shows
that while deflation alone may not cause recession, but
when combined with recession, it may cause lower subsequent
growth. Although interaction can lead to a downward spiral
of output and prices, the authors find that they dissipate
with time.
©
2006 IUP . All Rights Reserved.
Model
of Inflation Processes in the Republic of Belarus
--
Valery
Chernookiy
In
this article, the econometric model of the inflation processes
in the Republic of Belarus is discussed, which makes it
possible to explain the major factors determining the dynamics
of the GDP deflator, consumer price index and producer price
index during the period of 1994-2003. For estimation of
the model, the author uses statistical tools of the non-stationary
time series econometrics: Cointegration analysis and error-correction
models. The model has good statistical properties. It demonstrates
the stability of the coefficients and enables one to conduct
an analysis of the various choices in the field of monetary
and foreign exchange policies and also labor remuneration,
prices and tariffs.
©
2006 IUP . All Rights Reserved.
Asymmetric
Information, Tax Evasion and Alternative Instruments of
Government Revenue
-- Rangan
Gupta
Using
a pure-exchange overlapping generations model, characterized
with tax evasion and information asymmetry between the government
(the social planner) and the financial intermediaries, the
author discusses the optimal tax and seigniorage plans,
derived from the welfare maximizing objective of the social
planner. It is observed that irrespective of whether the
economy is characterized by tax evasion or asymmetric information,
a benevolent social planner maximizing welfare and simultaneously
financing the budget constraint, should optimally rely on
explicit, rather than implicit taxation.
©
2006 IUP . All Rights Reserved.
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