Characterising monetary and fiscal rules and interactions when commodity prices matter

Research output: Working paperDiscussion paper


Using conventional rules to characterize policy behaviour in emerging market economies requires innovations capable of capturing distinctive structural characteristics. We examine the extent to which commodity price fluctuations matter for monetary and fiscal policy formulation in high primary commodity export economies. Markov mixture specifications of monetary and fiscal policy rules stylized to account for commodity price slacks are estimated using specifically designed Bayesian techniques. We find that policy authorities indeed respond to commodity price slacks but with variations depending on the policy regime in place and country. The results hold implications for the correct specification of policy rules and interactions in DSGE models for such economies.

Bibliographical metadata

Original languageEnglish
PublisherUniversity of Manchester
Publication statusPublished - 8 Jul 2016

Publication series

NameCentre for Growth and Business Cycle Research Discussion Paper Series
PublisherThe University of Manchester