Munich Personal RePEc Archive

Microfundaments of a Monetary Policy Rule, Poole's Rule

Valdivia Coria, Joab Dan and Valdivia Coria, Daney David (2019): Microfundaments of a Monetary Policy Rule, Poole's Rule. Published in:

There is a more recent version of this item available.
[thumbnail of MPRA_paper_95489.pdf] PDF

Download (2MB)


The monetary policy framework of many countries has been developed under an Inflation Targeting Framework, which is a fixed central bank interest rate. The well-known Taylor's Rule is the rule of monetary policy applied in empirical evidence for the mode of transmission mechanisms of the Central Bank. Microfoundations in Log-linear terms are consistent in line with Kranz (2015), however countries such as: China, Nigeria, Bolivia, Yemen, Suriname, among others, are in a different framework, control of the money supply (the IMF defines as Monetary Objective Aggregate). The MacCallum's Rule proposed in the 1980s would be more appropriate to describe the transmission mechanisms of monetary policy in this type of policy. But in the present investigation it is based on a monetary policy rule different from the conventional ones. Thanks to the contribution of William Poole in 1970, our Policy Rule explains that the money supply reacts to the behavior of five (5) variables: product gap, interest rate gap, observed interest rate, product expectations and inflation; for what we call this instrument the Poole's Rule. Through a Dynamic Stochastic General Equilibrium Model (DSGE) we check if said rule is appropriate for economies under a different Inflation Targeting Framework.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.