Modeling of key policy rate using system dynamics approach

Abstract

Optimal monetary policy ensures price stability and general trust of the nation’s currency. It also contributes to the stability of gross domestic product, low unemployment, and predictable exchange rates with other currencies. In Ukraine, the authority responsible for monetary policy is the National Bank of Ukraine. The NBU’s monetary policy prioritizes achieving and maintaining price stability, meaning low and stable inflation, which protects the incomes and savings of the households from depreciation and enables entrepreneurs to make long-term investments in the domestic economy, creating jobs.