Monetary Policy Frameworks: An Index and New Evidence

IMF Working Papers, January 28, 2022

Source details

Objective: Provide a multidimensional characterization of monetary policy frameworks across three pillars (IAPOC): Independence and Accountability, Policy and Operational Strategy, and Communications.
Construction: The IAPOC index is constructed by analyzing central banks’ laws and websites for 50 advanced economies, emerging markets, and low-income developing countries.
Sample period: 2007 to 2018.
Scope: The index emphasizes scope and granularity to deliver a holistic view of monetary policy frameworks that goes beyond existing measures of transparency or independence, and beyond monetary policy or exchange rate regime classifications.

The IAPOC index offers a more holistic, multidimensional measure of monetary policy frameworks compared with prior single-dimension indices of transparency or independence.
Cross-country and over-time comparisons of the IAPOC index reveal that monetary policymaking:
- Is varied across countries.
- Is fast-changing over the 2007–2018 period.
- Is eclectic particularly across the Policy and Operational Strategy and Communications pillars.
The variability and dynamism in Policy and Operational Strategy and Communications are especially pronounced in emerging markets and low-income developing countries.

Subjects: Central bank autonomy, Central banks, Exchange rate arrangements, Exchange rate flexibility, Foreign exchange, Inflation targeting, Monetary policy, Monetary policy frameworks.
Keywords: Africa, B. II, Central bank autonomy, Central Bank Independence, Central Bank Transparency, Central Banks, Exchange rate arrangements, Exchange rate flexibility, Exchange Rate Regime, Global, IAPOC index, Inflation targeting, Monetary Policy, Monetary policy frameworks, Monetary Policy Regime, novel Policy, regime classification, strengthening of Independence, transparency indices.