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The Implementation of Monetary Policy in an Emerging Economy: The Case of Chile
Christian A. Johnson
Rodrigo Vergara

PUC Economics Institute Working Paper No. 291, 2005.
ISSN: Print 0716-7334 Electronic 0717-7593

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Central bank authorities base implementation of monetary policy on an analysis of multiple variables known as monetary policy indicators. In a small open economy such as Chile, these indicators may include inflation misalignments, unemployment, GDP growth, money growth, the current account balance, exchange rate volatility and international reserves. A neural network approach is used to establish the corresponding weights considered by the Board of the Central Bank of Chile during the period 1995-2003. GDP growth and the difference between the actual and the target inflation were found to be among the variables of greatest weight in the monetary policy decision-making process of the Central Bank of Chile during this period.

Clasification JEL: E52, C45
Keyword: Monetary policy, neural network
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Publicado como "The Implementation of Monetary Policy in an Emerging Economy: The Case of Chile", Revista de Análisis Económico, Vol. 20, Nº 1, pp. 45-62, junio 2005.
 
 
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