The political economy of central bank’s quasi-fiscal operations implemented for 2012-2016 in Mongolia

Doojav, Gan-Ochir (2018): The political economy of central bank’s quasi-fiscal operations implemented for 2012-2016 in Mongolia.

Abstract

This paper reviews issues associated with quasi-fiscal operations of the Bank of Mongolia (BOM) implemented during the period 2012-2016 in context of political economy. Under the quasi-fiscal operations, the BOM injected about MNT 7 trillion (which is equivalent to 40 percent of GDP) into the economy over the period 2012-2016. The politically driven quasi-fiscal operations to buffer the economy from external shocks supported growth for a while, but at the cost of increasing economic vulnerabilities. Several lessons are learned from the quasi-fiscal operations. The case study of Mongolia supports the view that politics leads to the economic fluctuations not only through fiscal policy, but also through monetary policy in developing countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Central bank independence, Political pressure, Quasi-fiscal operations, Monetary policy, Mongolia
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E20 - General; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; P - Economic Systems > P4 - Other Economic Systems > P48 - Political Economy ; Legal Institutions ; Property Rights ; Natural Resources ; Energy ; Environment ; Regional Studies

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