Monetary Policy in Fossil Fuel Exporters : The Curse of Horizons
This paper examines the role of monetary policy in fossil fuel exporters at different horizons. The main argument is that central banks in these economies need to look beyond the horizon of the business cycle. In the short run, (independent) moneta...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/237551560255567369/Monetary-Policy-in-Fossil-Fuel-Exporters-The-Curse-of-Horizons http://hdl.handle.net/10986/31871 |
| Summary: | This paper examines the role of monetary
policy in fossil fuel exporters at different horizons. The
main argument is that central banks in these economies need
to look beyond the horizon of the business cycle. In the
short run, (independent) monetary policy should flexibly
target inflation. In the medium run, central banks need to
coordinate with fiscal authorities to ensure that monetary
policy operates around a credible and sustainable fiscal
anchor. In the long run, central banks should beware of the
existential threats posed by new risks related to stranded assets. |
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