China’s monetary policy and the exchange rate

The paper models monetary policy in China using a hybrid McCallum-Taylor empirical reaction function. The feedback rule allows for reactions to inflation and output gaps, and to developments in a trade-weighted exchange rate gap measure. The investigation finds that monetary policy in China has, on average, accommodated inflationary developments. But exchange rate shocks do not significantly affect monetary policy behavior, and there is no evidence of a structural break in the estimated reaction function at the end of the strict dollar peg in July 2005. The paper also runs an exercise incorporating survey-based inflation expectations into the policy reaction function and meets with some success.exchange rate; hybrid McCallum-Taylor monetary policy reaction function; SVAR; survey-based inflation expectations; China

Forecasting Inflation in China

This paper forecasts inflation in China over a 12-month horizon. The analysis runs 15 alternative models and finds that only those considering many predictors via a principal component display a better relative forecasting performance than the univariate benchmark.inflation forecasting; data-rich environment; principal components; China

Assessing the impact of different nominal anchors on the credibility of stabilisation programmes

The paper compares the impact of announcing exchange-rate-based versus money-based stabilisation programmes in a cross-section of countries. The analysis finds that the effect of announcing exchange-rate-based programmes is more credible, in terms of reducing inflation inertia, than the outcome associated with implementing money-based programmes. But the gap between the magnitudes of the impacts from implementing the different strategies has been falling since the 1970s.Inflation stabilisation; credibility; nominal anchors; IMF programmes

The day-to-day interbank market, volatility, and central bank intervention in a developing economy

This paper investigates banking system instability vis-à-vis the day-to-day interbank market and monetary policy effectiveness in the Dominican Republic. The analysis reveals a negative relationship among excess banking system reserves and the interbank interest rate, and shows that in crisis ‘news’ affect the interbank rate’s volatility asymmetrically and non-linearly. The paper also finds that the 2002-2003 banking crisis and the subsequent central bank intervention as a lender of last resort weakened monetary policy’s transmission mechanism. These events undermined the ensuing stabilization effort, stressing the pervasive short-run trade-off between preserving macroeconomic stability and safeguarding financial stability, and the pitfalls of monetary policymaking in a highly volatility setting.interbank market; financial stability; monetary policy; IMF stabilisation programme; Dominican Republic.

Economic Development Strategies in the Dominican Republic

The paper documents the economic development strategies pursued by the Dominican Republic. The study argues that the country’s success results from the implementation of a three-pronged economic development strategy. The first prong relates to diversifying production and the second to developing special economic zones. These zones operate in parallel fashion to the rest of the economy but with protections from domestic impediments to growth and progress. The third item in the recipe involves maintaining ample economic and social engagement with the rest of the world. The paper also highlights challenges that the country faces going forward.economic development strategies, primary commodities, special economic zones, economic openness, Dominican Republic

Modelación de la inversión en centroamérica y la república dominicana.

El artículo modela los determinantes de la inversión agregada en Costa Rica, El Salvador, Guatemala, Honduras y la República Dominicana usando series estadísticas anuales de las últimas cuatro décadas del siglo 20. Las estimaciones para el largo plazo descubren funciones de inversión cointegradas. La modelación de la dinámica de corto plazo revela un impacto significativo del crecimiento del producto sobre el crecimiento de la inversión en cada una de las economías. Sin embargo, las tasas de interés y las medidas de incertidumbre y de actividad del gobierno, no son sistemáticamente relevantes en la determinación de la dinámica de la inversión agregada

Modelling the link between aggregate income and carbon dioxide emissions in developing countries: The case of the Dominican Republic

The paper estimates the link between aggregate income and carbon dioxide emissions for the Dominican Republic. The econometric analysis finds evidence of an environmental Kuznets curve revealing that the level of annual real per capita income at which carbon dioxide emissions start to stabilise is around US$1,600. The estimations support evidence in the literature revealing that the curve has been flattening and shifting to the left

Modelación de la inversión en centroamérica y la república dominicana.

El artículo modela los determinantes de la inversión agregada en Costa Rica, El Salvador, Guatemala, Honduras y la República Dominicana usando series estadísticas anuales de las últimas cuatro décadas del siglo 20. Las estimaciones para el largo plazo descubren funciones de inversión cointegradas. La modelación de la dinámica de corto plazo revela un impacto significativo del crecimiento del producto sobre el crecimiento de la inversión en cada una de las economías. Sin embargo, las tasas de interés y las medidas de incertidumbre y de actividad del gobierno, no son sistemáticamente relevantes en la determinación de la dinámica de la inversión agregada

Producto, desempleo y la Ley de Okun en la República Dominicana

The paper investigates Okun’s Law for the Dominican Republic during the second part of the twentieth century and the first decade of the twenty first. The econometric modelling estimates an Okun coefficient implying that, on average, for every 1 percent growth in real output the unemployment rate decreases 0.5 percentage points. But recursive modelling reveals that Okun’s coefficient has being falling during the last forty years from -0.88 in 1966 to -0.5 in 2013. The drop in the magnitude of Okun’s coefficient and the inertia in the number of workers registered out of the labour supply could help in illuminating episodes of ‘jobless growth’ observed for the Dominican Republic. The analysis also reveals that the implicit average rate of real output growth consistent with stable unemployment is 4.5% per annum

Modelación de la inversión en centroamérica y la república dominicana.

El artículo modela los determinantes de la inversión agregada en Costa Rica, El Salvador, Guatemala, Honduras y la República Dominicana usando series estadísticas anuales de las últimas cuatro décadas del siglo 20. Las estimaciones para el largo plazo descubren funciones de inversión cointegradas. La modelación de la dinámica de corto plazo revela un impacto significativo del crecimiento del producto sobre el crecimiento de la inversión en cada una de las economías. Sin embargo, las tasas de interés y las medidas de incertidumbre y de actividad del gobierno, no son sistemáticamente relevantes en la determinación de la dinámica de la inversión agregada