Monetary Conditions Index as an Explanatory of Monetary Policy. Case for Georgia(Pages 1226-1231)
Vusal Gasimli1, Gunay Guliyeva2,* and Joshgun Jafarov3
1Planning and managing sustainable development - Academy of Public Administration under the President of Azerbaijan - Azerbaijan, Baku city, Sabail district, AZ 1001, Lermontov street, 74.
2International Economics - Azerbaijan University of Economics, Baku, Azerbaijan.
3Adminstrative Management - Academy of Public Administration under the President of Azerbaijan, Azerbaijan, Baku city, Sabail district, AZ 1001, Lermontov Street, 74.
The main focus of this article is to examine the effectiveness of monetary policy in Georgia through the use of the Monetary Conditions Index (MCI). This index combines interest rates and exchange rates into a single metric and can be used to evaluate the impact of monetary policy on the real sector. The authors of this paper aim to create an MCI for Georgia between 2011 and 2021 using quarterly data. In order to determine the relative importance of interest rates and exchange rates, the authors used the ADF test to test the stationarity of model estimates and applied Johansen’s co-integration technique to establish the relationships among these parameters. The results of using the Monetary Conditions Index as an indicator indicate that it accurately reflects movements in interest rates and closely monitors changes in exchange rates. In this study, the calculation of the MCI for Georgia is carried out taking into account the years 2011-2021 on a quarterly basis. When calculating the MCI, almost all studies were carried out using constant weights for the interest rate and exchange rate variables, as is customary in the literature.
Monetary Condition Index, Monetary Policy, real GDP growth rate, inflation.
G21, L26, O16.
How to Cite:
Vusal Gasimli, Gunay Guliyeva and Joshgun Jafarov. Monetary Conditions Index as an Explanatory of Monetary Policy. Case for Georgia. [ref]: vol.21.2023. available at: https://refpress.org/ref-vol21-a135/
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