The objective of this study is to estimate a monetary policy reaction function for Pakistan. To do this, we use data for the period 1992Q4–2010Q2. Our results show that the State Bank of Pakistan reacts to changes in the inflation rate and economic activity in a manner that is consistent with...

Monetary policy has changed in a number of ways in the last two decades. Along with other characteristics, modern monetary policy is forward-looking and today central banks, to maintain credibility, respond contemporaneously to structural shocks that might make inflation deviate from the target...

Monetary policy has changed in a number of ways during the last two decades . Along with the other characteristics, modern monetary policy is forward-looking, and the central banks respond contemporaneously to structural shocks that are expected to make inflation deviate from the future targets....