Pacific Economic Outlook Structure Project: Monetary Policy Regimes in the Pacific Region (2013) (pdf, 2.7MB)
45 pages
 
This Report is the 14th in a series of studies carried out by the Pacific Economic Outlook (PEO) Structure group as an international project of PECC. Following the previous topic of 'macrofinancial linkages and financial deepening,' this year, the PEO Structure group focused on monetary policy regimes, and how they affect macroeconomic performance in advanced and emerging economies in the Pacific region. In the context of ongoing global economic volatilities, macroeconomic policy trilemma - i.e. exchange rate stability, free capital mobility, and monetary autonomy - has been re-examined with the coordination of the study undertaken by Dr. Akira Kohsaka, Professor at the School of International Studies at Kwansei Gakuin University, Hyogo, Japan. 

The study examines, how we can more effectively set macroeconomic policy instruments, and in what kinds of institutional settings. In the context of advanced economies, rule-based monetary policies represented by inflation targeting have been pursued. But they failed to prevent the bubble-bursts of the global asset market. Many emerging and developing economies abandoned the virtual dollar peg system of exchange rates and adopted, as another nominal anchor, inflation targeting with flexible exchange rates and freer capital movement. But they are now confronted with volatile international financial flows and exchange rate risks, which may impact their long-term growth paths to a significant degree. 

In observation of the above factors, following questions set off the discussions: 1) The current crisis has seriously affected domestic financial systems and macroeconomic developments in the region. How have the policy authorities coped with these and how can we assess their efforts to date? 2) Then, does the above examination suggest that we should change the framework of monetary policy management or monetary policy regimes in terms of monetary policy independence, exchange rate stability and capital mobility? 3) If so, how? If not, why not?

TABLE OF CONTENTS

I. Preface
II. Specialists, PEO/ Structure Project
III. Overview (by Akira Kohsaka, Coordinator, PEO)
  1) Introduction and Summary
  2) Policy Objectives: Challenges to conventional wisdom 
  3) Policy Transmission: Global financial linkages and domestic financial deepening
  4) Assessments of Policy Outcomes: This time is very different
  5) Sustainability from a Global Perspective
  6) References
IV. Executive Summaries on Individual Economies
  1) Australia (by Alex Robson, Anthony Makin)
  2) China (by Dongmin Liu)
  3) Colombia (by Jorge Hernan Toro Cordoba)
  4) Indonesia (by Solikin M. Juhro, Miranda S. Goeltom)
  5) Korea (by In Huh)
  6) The Philippines (by Cayetano W. Paderanga., Jr.)
  7) Chinese Taipei (by Sheng-Cheng Hu)
  8) Thailand (by Chaiyasit Anuchitworawong)
  9) East Asia (by Peter J. Morgan)
V. Past Issues of PEO/ Structure Project (
VI. Pacific Economic Cooperation Council
VII. Pacific Economic Cooperation Council Member Committees
VIII. Asia Pacific Institute of Research
 
CONTACT
E-mail: contact@apir.or.jp 
Website: www.apir.or.jp