Arbeitspapier
Should Hong Kong switch to Taylor rule? Evidence from DSGE model
This paper studies the economy of Hong Kong through the lens of a small open economy DSGE model with a currency board exchange rate commitment. It assumes flexible prices and a banking system that provides credit to entrepreneurial household-firms; the money supply is fully backed by reserves under the currency board. We estimate and evaluate the model by Indirect Inference over the sample period of 1994Q1-2018Q3; we find that it matches the data behaviour, as represented by a VAR. We examined the economy's volatility using bootstrapping of the model innovations, under both the estimated currency board model and a standard alternative regime with floating exchange rate and a Taylor rule; we found that Hong Kong welfare is higher in the currency board, which substantially reduces output volatility.
- Sprache
-
Englisch
- Erschienen in
-
Series: Cardiff Economics Working Papers ; No. E2021/13
- Klassifikation
-
Wirtschaft
Monetary Policy
Open Economy Macroeconomics
- Thema
-
Currency Board
Monetary Policy
Hong Kong
Indirect Inference
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Meenagh, David
Minford, Patrick
Zhao, Zhiqi
- Ereignis
-
Veröffentlichung
- (wer)
-
Cardiff University, Cardiff Business School
- (wo)
-
Cardiff
- (wann)
-
2021
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Meenagh, David
- Minford, Patrick
- Zhao, Zhiqi
- Cardiff University, Cardiff Business School
Entstanden
- 2021
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