Responsiveness of Monetary Policy to Economic Uncertainty: Evidence from the ASEAN-5 Plus 3 Countries
A notable feature of empirical research on the monetary policy rule is that not many studies rely on the responsiveness of the monetary policy to the goals of the central bank. Policy responsiveness aligns with the appropriate relative weights placed on the goals following their priority. To over...
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| Format: | Article |
| Language: | English English |
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INTI International University
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| Online Access: | http://eprints.intimal.edu.my/2001/ http://eprints.intimal.edu.my/2001/1/jobss2024_06.pdf http://eprints.intimal.edu.my/2001/2/539 |
| _version_ | 1848766893846953984 |
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| author | Lim, Ee-Vern Gan, Pei-Tha Azila, Abdul Razak Awadh Ahmed, Mohammed Gamal |
| author_facet | Lim, Ee-Vern Gan, Pei-Tha Azila, Abdul Razak Awadh Ahmed, Mohammed Gamal |
| author_sort | Lim, Ee-Vern |
| building | INTI Institutional Repository |
| collection | Online Access |
| description | A notable feature of empirical research on the monetary policy rule is that not many studies
rely on the responsiveness of the monetary policy to the goals of the central bank. Policy
responsiveness aligns with the appropriate relative weights placed on the goals following their
priority. To overcome this shortcoming, this study uses open economy Taylor rule in economic
uncertainty and examines its empirical validity based on a sample of ASEAN five plus three
countries, including Indonesia, Malaysia, Philippines, Singapore, Thailand, South Korea,
Japan, and China. By employing the autoregressive distributed lag (ARDL) model, this study
examines the long-run and the short-run relationships between economic uncertainty (i.e.
output uncertainty, inflation rate uncertainty, and exchange rate uncertainty) and monetary
policy. Additionally, this study examines the responsiveness of monetary policy in economic
uncertainty for goal-based performance measures. The findings provide some policy
implications; (i) both in the long run and/or short run, the central bank should consider the
policy variables (namely, output, inflation rate, and the exchange rate) underlying the premise
of unforeseen future economic events in its monetary policy decision makings for the best
economic outcomes, and (ii) the responsiveness of monetary policy to the central bank’s goals
can serve as a benchmark (namely, the size of the weights in policy rule) in aligning smooth
movements of the policy rate. |
| first_indexed | 2025-11-14T11:58:23Z |
| format | Article |
| id | intimal-2001 |
| institution | INTI International University |
| institution_category | Local University |
| language | English English |
| last_indexed | 2025-11-14T11:58:23Z |
| publisher | INTI International University |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | intimal-20012024-10-25T02:09:37Z http://eprints.intimal.edu.my/2001/ Responsiveness of Monetary Policy to Economic Uncertainty: Evidence from the ASEAN-5 Plus 3 Countries Lim, Ee-Vern Gan, Pei-Tha Azila, Abdul Razak Awadh Ahmed, Mohammed Gamal H Social Sciences (General) HF Commerce HG Finance A notable feature of empirical research on the monetary policy rule is that not many studies rely on the responsiveness of the monetary policy to the goals of the central bank. Policy responsiveness aligns with the appropriate relative weights placed on the goals following their priority. To overcome this shortcoming, this study uses open economy Taylor rule in economic uncertainty and examines its empirical validity based on a sample of ASEAN five plus three countries, including Indonesia, Malaysia, Philippines, Singapore, Thailand, South Korea, Japan, and China. By employing the autoregressive distributed lag (ARDL) model, this study examines the long-run and the short-run relationships between economic uncertainty (i.e. output uncertainty, inflation rate uncertainty, and exchange rate uncertainty) and monetary policy. Additionally, this study examines the responsiveness of monetary policy in economic uncertainty for goal-based performance measures. The findings provide some policy implications; (i) both in the long run and/or short run, the central bank should consider the policy variables (namely, output, inflation rate, and the exchange rate) underlying the premise of unforeseen future economic events in its monetary policy decision makings for the best economic outcomes, and (ii) the responsiveness of monetary policy to the central bank’s goals can serve as a benchmark (namely, the size of the weights in policy rule) in aligning smooth movements of the policy rate. INTI International University Article PeerReviewed text en http://eprints.intimal.edu.my/2001/1/jobss2024_06.pdf text en cc_by_4 http://eprints.intimal.edu.my/2001/2/539 Lim, Ee-Vern and Gan, Pei-Tha and Azila, Abdul Razak and Awadh Ahmed, Mohammed Gamal Responsiveness of Monetary Policy to Economic Uncertainty: Evidence from the ASEAN-5 Plus 3 Countries. Journal of Business and Social Sciences, 2024 (06). pp. 1-17. ISSN 2805-5187 http://ipublishing.intimal.edu.my/jobss.html https://doi.org/10.61453/jobss.v2024no06 |
| spellingShingle | H Social Sciences (General) HF Commerce HG Finance Lim, Ee-Vern Gan, Pei-Tha Azila, Abdul Razak Awadh Ahmed, Mohammed Gamal Responsiveness of Monetary Policy to Economic Uncertainty: Evidence from the ASEAN-5 Plus 3 Countries |
| title | Responsiveness of Monetary Policy to Economic Uncertainty: Evidence
from the ASEAN-5 Plus 3 Countries |
| title_full | Responsiveness of Monetary Policy to Economic Uncertainty: Evidence
from the ASEAN-5 Plus 3 Countries |
| title_fullStr | Responsiveness of Monetary Policy to Economic Uncertainty: Evidence
from the ASEAN-5 Plus 3 Countries |
| title_full_unstemmed | Responsiveness of Monetary Policy to Economic Uncertainty: Evidence
from the ASEAN-5 Plus 3 Countries |
| title_short | Responsiveness of Monetary Policy to Economic Uncertainty: Evidence
from the ASEAN-5 Plus 3 Countries |
| title_sort | responsiveness of monetary policy to economic uncertainty: evidence
from the asean-5 plus 3 countries |
| topic | H Social Sciences (General) HF Commerce HG Finance |
| url | http://eprints.intimal.edu.my/2001/ http://eprints.intimal.edu.my/2001/ http://eprints.intimal.edu.my/2001/ http://eprints.intimal.edu.my/2001/1/jobss2024_06.pdf http://eprints.intimal.edu.my/2001/2/539 |