Monetary Aggregate Targeting vs. Inflation Targeting: the Case of the Philippines

9410 Words Feb 10th, 2013 38 Pages
Chapter 1: Introduction and Background of the Study

1.1 Background of the Study: In almost all countries, monetary authority is governed by a central bank. In some countries, it is called federal reserve or reserve bank. Other countries like Andorra, Monaco and North Korea do not have a central bank due to various reasons. The central bank has always been responsible in managing the nation's money supply or its monetary policy through managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during financial crisis. In the past years, central banks in industrialized countries have made great pace in the regulation of monetary policy. The Bangko Sentral ng Pilipinas or BSP is
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This paper looks at the evolution of monetary policy in the Philippines by studying monetary aggregate targeting and inflation targeting. Moreover, this paper also present data of some economic indicators that may be affected by the monetary policy. The researcher also analyzes these data.

1.2 Statement of the Problem: The researcher wants to know more about the differences between monetary aggregate targeting and the inflation targeting, and would like to know if the current framework really helps in improving the country's economy. So, this paper will attempt to understand how the Philippines' monetary policy is conducted today and how it differs from the manner it was conducted in the past. Moreover, the researcher wants to prove that the current monetary policy
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