Implications of Globalization for Monetary Policy
November 1, 2001
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Summary
This paper argues that the implications of globalization for monetary policy come mainly through two channels: On the one hand, the many structural changes that are associated with the globalization process cause an increase in the uncertainty surrounding monetary policy. This includes an increase in uncertainty about how to interpret macroeconomic data/indicators and about the monetary transmission mechanism. On the other hand, by strengthening the process of global economic integration, globalization increases international competition, thereby forcing market players to make structural adjustments or reforms that change the conditions or constraints under which monetary policy is implemented.
Subject: Asset prices, Banking, Central bank autonomy, Central banks, Globalization, Inflation, Output gap, Prices, Production
Keywords: Asset prices, Central bank autonomy, exchange rate, Global, Globalization, globalization process, Inflation, loss function, monetary policy, open economy, Output gap, price level, rate of inflation, target regime, transmission mechanism, WP
Pages:
62
Volume:
2001
DOI:
Issue:
184
Series:
Working Paper No. 2001/184
Stock No:
WPIEA1842001
ISBN:
9781451859362
ISSN:
1018-5941
