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Does Central Bank Capital Matter for Monetary Policy?

Adler, Gustavo ; Castro, Pedro ; Tovar, Camilo

Open Economies Review, 2016, Vol.27(1), pp.183-205 [Peer Reviewed Journal]

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  • Title:
    Does Central Bank Capital Matter for Monetary Policy?
  • Author/Creator: Adler, Gustavo ; Castro, Pedro ; Tovar, Camilo
  • Language: English
  • Subjects: Monetary policy ; Central Bank Balance Sheets ; Central bank capital ; Emerging markets ; International reserves
  • Is Part Of: Open Economies Review, 2016, Vol.27(1), pp.183-205
  • Description: This paper examines empirically whether central bank capital influences the conduct of monetary policy. To this end, we estimate interest rate rules for a sample of 41 countries and employ linear and non-linear regression methods to test if a measure of central bank financial strength can explain deviations of actual interest rates from those predicted by the estimated interest rate (Taylor-like) rules. Our results suggest that central bank capital is indeed a relevant factor behind interest rate policy decisions.
  • Identifier: ISSN: 0923-7992 ; E-ISSN: 1573-708X ; DOI: 10.1007/s11079-015-9360-1