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Article

Monetary Policy Rule and Taylor Principle in Mongolia: GMM and DSGE Approaches

Graduate School of Humanities and Social Sciences, Saitama University, 225 Shimo-Okubo, Sakura-ku, Saitama 338-8570, Japan
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Int. J. Financial Stud. 2020, 8(4), 71; https://doi.org/10.3390/ijfs8040071
Received: 22 October 2020 / Revised: 10 November 2020 / Accepted: 11 November 2020 / Published: 16 November 2020
(This article belongs to the Special Issue Alternative Models and Methods in Financial Economics)
This article aims to examine the monetary policy rule under an inflation targeting in Mongolia with a focus on its conformity to the Taylor principle, through two kinds of approaches: a monetary policy reaction function by the generalized-method-of-moments (GMM) estimation and a New Keynesian dynamic stochastic general equilibrium (DSGE) model with a small open economy version by the Bayesian estimation. The main findings are summarized as follows. First, the GMM estimation identified an inflation-responsive rule fulfilling the Taylor principle in the recent phase of the Mongolian inflation targeting. Second, the DSGE-model estimation endorsed the GMM estimation by producing a consistent outcome on the Mongolian monetary policy rule. Third, the Mongolian rule was estimated to have a weaker response to inflation than the rules of the other emerging Asian adopters of an inflation targeting. View Full-Text
Keywords: monetary policy rule; Taylor principle; Mongolia; inflation targeting; GMM; the New Keynesian DSGE model; JEL Classification; E52; E58; O53 monetary policy rule; Taylor principle; Mongolia; inflation targeting; GMM; the New Keynesian DSGE model; JEL Classification; E52; E58; O53
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MDPI and ACS Style

Taguchi, H.; Gunbileg, G. Monetary Policy Rule and Taylor Principle in Mongolia: GMM and DSGE Approaches. Int. J. Financial Stud. 2020, 8, 71. https://doi.org/10.3390/ijfs8040071

AMA Style

Taguchi H, Gunbileg G. Monetary Policy Rule and Taylor Principle in Mongolia: GMM and DSGE Approaches. International Journal of Financial Studies. 2020; 8(4):71. https://doi.org/10.3390/ijfs8040071

Chicago/Turabian Style

Taguchi, Hiroyuki, and Ganbayar Gunbileg. 2020. "Monetary Policy Rule and Taylor Principle in Mongolia: GMM and DSGE Approaches" International Journal of Financial Studies 8, no. 4: 71. https://doi.org/10.3390/ijfs8040071

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