Monetary policy shocks: the effects of instruments to real variables
Date
2004-03
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Abstract
The Central Bank was created to oversee and control the money supply in the
economy for the purpose of stabilizing prices and inducing growth.
To pursue this objective it uses different monetary tools and instruments.
This paper traces the effects of monetary policy shocks in repurchase rate (RP), reverse repurchase rate (RRP) and non-borrowed reserve to real variables. It also examines the magnitude and effectivity of these policy tools. We therefore, look at the changes in prices, gdp and total reserve upon the implementation of monetary policy, through the impulse response function.
At the end, we gave a conclusion regarding the effectiveness of Central Bank's policy in pursuing its objectives.
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Keywords
Monetary policy, Interest rates, Monetary policy instruments, Real variables, Money supply