Umar, Mohammed and Dahalan, Jauhari (2015) The effectiveness of overnight policy rate as a nominal anchor for Malaysian monetary policy. In: 4th ASEAN Consortium on Department of Economics Conference (ACDEC) 2015, 04-05 November 2015, Student Accomodation Centre (SAC), UUM.

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Abstract

This paper examines the effectiveness of Overnight Policy Rate (OPR) as a nominal anchor for Malaysian monetary policy and the process through which the monetary authority determines the policy rate in the economy.The paper applies Generalized Method of Moments (GMM) estimators to estimate both baseline and augmented policy rules.The findings of the post OPR adoption and full sample periods are characterized by forward-looking policy rule.Moreover, the study uses the augmented monetary policy rule to identify the factors that determine the overnight policy rate in the economy.The results confirm that the overnight policy rate framework serves as a nominal anchor for the economy. The policy implication of the findings is that for Malaysian economy to continue keeping the overnight policy rate to the required basis point, Bank Negara Malaysia should further enjoy monetary policy independence to strengthen the OPR framework adopted in the economy.

Item Type:	Conference or Workshop Item (Paper)
Additional Information:	ISBN 978-983-43720-4-0 Organized by: Universiti Utara Malaysia
Uncontrolled Keywords:	baseline policy rule; forward-looking rule; Generalized Method of Moments; Malaysia; monetary policy; nominal anchor; structural breaks.
Subjects:	H Social Sciences > HJ Public Finance
Divisions:	School of Economics, Finance & Banking
Depositing User:	Prof. Dr. Jauhari Dahalan
Date Deposited:	31 Jan 2016 04:19
Last Modified:	17 Apr 2016 03:39
URI:	https://repo.uum.edu.my/id/eprint/17049

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