Lahore School of Economics

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Monetary Policy, Inflation and Economic Growth

Dr. Mohsin Khan, Atlantic Council

The design and operation of monetary policy has evolved considerably over the past two decades. This paper examines how these developments have been incorporated into Pakistan’s monetary policy framework. The analysis focuses on the relationship between monetary policy and inflation, and then on inflation and economic growth. It is argued that the State Bank of Pakistan has often found itself facing the classic dilemma of operating an independent monetary policy in the context of an open capital account, an exchange rate target, and an economic growth objective. Adopting an inflation targeting regime would be a more appropriate way to conduct monetary policy, as other countries have found, and keeping inflation low would have beneficial effects on long-run economic growth.

About the presenter:
Mohsin Khan is a senior fellow in the Rafik Hariri Center for the Middle East at the Atlantic Council in Washington, DC. Dr. Khan was a senior fellow at the Peterson Institute for International Economics since March 2009. Previously he was the Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF). This department is responsible for monitoring macroeconomic developments and providing policy advice to 32 countries in the Middle East, North Africa, and Central Asia, and for advising IMF management and Executive Board on country-specific and regional matters. He holds degrees from Columbia University (MA) and the London School of Economics (BSc. and PhD).

Dr. Khan’s publications cover macroeconomic and monetary policies in developing countries, economic growth, international trade and finance, Islamic banking, Middle East oil markets, exchange rates, and IMF programs. He has edited 7 books, published numerous articles in major economics journals, and serves on the editorial boards of 10 academic journals. In 2003 he was awarded the Islamic Development Bank Prize in Islamic Economics for outstanding contributions to the field.

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posted by S A J Shirazi @ 3/26/2014 10:00:00 AM,

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