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A comprehensive classification of monetary policy frameworks for advanced and emerging economies

Cobham, David (2018): A comprehensive classification of monetary policy frameworks for advanced and emerging economies.

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Abstract

The paper presents a new classification of monetary policy frameworks which it applies to ‘advanced’ and 'emerging' economies for the period since the end of the Bretton Woods international monetary system. The classification is multi-dimensional, in particular while the main focus is on the monetary authorities' objectives and account is taken of both pre-announced targets and actual performance, it also emphasises the development of the underlying monetary and financial infrastructure which conditions the instruments available to the monetary authorities and therefore the coherence of different policy frameworks. It is based in large part on information obtained from a close reading of the monetary policy elements of IMF Article IV consultations. The two major changes which can be seen in the data are the swing over time in these countries towards a heavier focus on inflation, and the trend towards more systematic and coherent monetary arrangements which are typically associated with lower inflation and better, or at least not lower, economic growth. The classification, which will eventually be extended to cover developing countries as well, should enable researchers in the future to address a number of questions about comparative economic performance in a more nuanced way than has so far been possible.

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