GLOBAL FINANCIAL INTEGRATION, MONETARY POLICY, AND INFLATIONARY EXPECTATIONS

ABSTRACT. McCauley remarks that the central banks of Malaysia and Thailand have two main monetary policy goals: low inflation and stable exchange rates. Mohanty and Scatigna remark that growing global financial integration has influenced monetary policy in important ways. Bhuiyan proposes to incorporate a forward-looking dimension into the monetary policy rule, by adding inflationary expectations as a contemporaneous input, to identify the policy shoch in the structural VAR model. Berger et al. maintain that by adopting a pro-active strategy monetary policy-makers aim at avoiding a future credit crunch in the first place.