Monetary policy regime through the lense of New Keynesian DSGE model : case of Mongolia
|Author:||Mgr. Bilguun Sukhbaatar|
|Year:||2014 - summer|
|Leaders:|| Ing. Aleš Maršál M.A.
|Work type:|| Masters
|Awards and prizes:||M.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance.|
|Abstract:||This paper identifies an optimal monetary policy rule using a calibrated small open economy DSGE
model for Mongolian economy. The main result of this study is that domestic inflation-based Taylor rule
is the best monetary policy regime for the Central bank of Mongolia (BoM) in terms of welfare loss.
Therefore, the result of welfare analysis suggests that BoM should consider not only CPI inflation but
also output gap in order to improve household welfare in economy. On the other hand currency board
with fixed exchange rate regime could be very harmful to the Mongolian economy because it makes
domestic economy more unstable in comparison to the other regimes