Monetary policy rules and economic fluctuations

Taufiq Carnegie Dawood (Department of Economic Development, Faculty of Economics and Business, University of Syiah Kuala, Banda Aceh)

Proceedings of Annual International Conference Syiah Kuala University - Social Sciences Chapter
Vol 7 (2017): 7th AIC in conjuction ICMR 2017 Universitas Syiah Kuala October 2017

This paper found, for economies with high unhedged foreign borrowing, different monetary rules has produced differences in dynamics. In particular policy rules which place large weights on stability of the exchange rate, amplifies macroeconomic variables fluctuations. This underscores importance for caution of intervening in the exchange rate markets for economies with high percentage of unhedged foreign debt.