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Non Linear Monetary Policy Rules
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Author :Juan José Dolado Publisher :Centre interuniversitaire de recherche en économie quantitative ISBN 13 : Total Pages :40 pages Book Rating :4.X/5 (4 download)
Book Synopsis Non-linear Monetary Policy Rules by : Juan José Dolado
Download or read book Non-linear Monetary Policy Rules written by Juan José Dolado and published by Centre interuniversitaire de recherche en économie quantitative. This book was released on 2002 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Simple Monetary Policy Rules Under Model Uncertainty by : Ann-Charlotte Eliasson
Download or read book Simple Monetary Policy Rules Under Model Uncertainty written by Ann-Charlotte Eliasson and published by International Monetary Fund. This book was released on 1999-05-01 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using stochastic simulations and stability analysis, the paper compares how different monetary rules perform in a moderately nonlinear model with a time-varying nonaccelerating-inflation-rate-of-unemployment (NAIRU). Rules that perform well in linear models but implicitly embody backward-looking measures of real interest rates (such as conventional Taylor rules) or substantial interest rate smoothing perform very poorly in models with moderate nonlinearities, particularly when policymakers tend to make serially correlated errors in estimating the NAIRU. This challenges the practice of evaluating rules within linear models, in which the consequences of responding myopically to significant overheating are extremely unrealistic.
Book Synopsis Optimal Non-linear Monetary Policy Rules by :
Download or read book Optimal Non-linear Monetary Policy Rules written by and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Avoiding Dark Corners by : Ali Alichi
Download or read book Avoiding Dark Corners written by Ali Alichi and published by International Monetary Fund. This book was released on 2015-06-25 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Fed has taken several steps towards strengthening its monetary framework over the past several years. Those steps have supported the Fed’s efforts to stimulate the economy through forward guidance despite being constrained by having policy rates at zero. We show that an optimal control approach to monetary policy, which includes the publication of a baseline forecast and a description of the uncertainties around that outlook, combined with an improvement in the Fed’s communications toolkit, could further enhance the effectiveness of Fed policy. In the current conjuncture, such a risk management approach to monetary policy would result in both a later liftoff of policy rates and a modest, but planned, overshooting of inflation.
Book Synopsis Monetary Policy Rules in Emerging Countries by : Guglielmo Maria Caporale
Download or read book Monetary Policy Rules in Emerging Countries written by Guglielmo Maria Caporale and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis NAIRU Uncertainty and Nonlinear Policy Rules by : Laurence H. Meyer
Download or read book NAIRU Uncertainty and Nonlinear Policy Rules written by Laurence H. Meyer and published by . This book was released on 2001 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Monetary Policy Rules by : John B. Taylor
Download or read book Monetary Policy Rules written by John B. Taylor and published by University of Chicago Press. This book was released on 2007-12-01 with total page 460 pages. Available in PDF, EPUB and Kindle. Book excerpt: This timely volume presents the latest thinking on the monetary policy rules and seeks to determine just what types of rules and policy guidelines function best. A unique cooperative research effort that allowed contributors to evaluate different policy rules using their own specific approaches, this collection presents their striking findings on the potential response of interest rates to an array of variables, including alterations in the rates of inflation, unemployment, and exchange. Monetary Policy Rules illustrates that simple policy rules are more robust and more efficient than complex rules with multiple variables. A state-of-the-art appraisal of the fundamental issues facing the Federal Reserve Board and other central banks, Monetary Policy Rules is essential reading for economic analysts and policymakers alike.
Book Synopsis Monetary Policy Rules and the U.S. Business Cycle by : Pau Rabanal
Download or read book Monetary Policy Rules and the U.S. Business Cycle written by Pau Rabanal and published by International Monetary Fund. This book was released on 2004-09 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper estimates Taylor-type interest rates for the United States allowing for both time and state dependence. It provides evidence that the coefficients of the Taylor rule change significantly over time, and that the behavior of the Federal Reserve over the cycle can be explained using a two-state switching regime model. During expansions, the Federal Reserve follows a rule that can be characterized as inflation targeting with a high degree of interest rate smoothing. During recessions, the Federal Reserve targets output growth and conducts policy in a more active manner. The implications of conducting this type of policy are analyzed in a small scale new Keynesian model.
Book Synopsis Non-linear Moneatary Policy Rules by : Juan José Dolado
Download or read book Non-linear Moneatary Policy Rules written by Juan José Dolado and published by . This book was released on 2002 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Monetary Policy Rules for Financially Vulnerable Economies by : Mr.Eduardo Morón
Download or read book Monetary Policy Rules for Financially Vulnerable Economies written by Mr.Eduardo Morón and published by International Monetary Fund. This book was released on 2003-02-01 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: One distinguishable characteristic of emerging market economies is that they are not financially robust. These economies are incapable of smoothing out large external shocks, as sudden capital outflows imply large and abrupt swings in the real exchange rate. Using a small open-economy model, this paper examines alternative monetary policy rules for economies with different degrees of liability dollarization. The paper answers the question of how efficient it is to use inflation targeting under high liability dollarization. Our findings suggest that it might be optimal to follow a nonlinear policy rule that defends the real exchange rate in a financially vulnerable economy.
Book Synopsis Monetary Policy Rules in Emerging Market Economies by : M. S. Mohanty
Download or read book Monetary Policy Rules in Emerging Market Economies written by M. S. Mohanty and published by . This book was released on 2004 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Monetary Policy Rules and Inflation Dynamics by : Saad Ahmad
Download or read book Essays on Monetary Policy Rules and Inflation Dynamics written by Saad Ahmad and published by . This book was released on 2016 with total page 264 pages. Available in PDF, EPUB and Kindle. Book excerpt: There has been a growing trend to utilize nonlinear models to analyze key issues in monetary policy and international macroeconomics. Using traditional linear models to understand nonlinear relationships can often lead to inaccurate inference and erroneous policy recommendations. The three essays in this dissertation explore nonlinearity in the Federal Reserve’s policy response as well as between a country’s inflation dynamics and integration in the global economy. My aim in accounting for potential nonlinearity is to get a better understanding of the policy makers’ opportunistic approach to monetary policy and evaluate the inflation globalization hypothesis, which basically predicts that global factors will eventually replace the domestic determinants of inflation. In the first essay I develop abroad nonlinear Taylor rule framework, in conjunction with real time data, to examine the Fed’s policy response during the Great Moderation. My flexible framework is also able to convincingly show that the Fed departed from the Taylor rule during key periods in the Great Moderation as well as in the recent financial crisis. The second essay uses a threshold methodology to investigate the importance of nonlinear effects in the analysis of the inflation globalization hypothesis. Finally the third essay investigates the relationship between inflation and globalization, under an open-economy Phillips Curve framework, for a panel of OECD countries with a dynamic panel GMM methodology. Contrary to most of the previous literature, which ignores such nonlinearities, my new approach provides some interesting empirical evidence supportive of the effect globalization has on a country’s inflation dynamics.
Book Synopsis Monetary Policy Under Flexible Exchange Rates by : Pierre-Richard Agénor
Download or read book Monetary Policy Under Flexible Exchange Rates written by Pierre-Richard Agénor and published by World Bank Publications. This book was released on 2000 with total page 100 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the past few years, a number of central banks have adopted inflation targeting for monetary policy. The author provides an introduction to inflation targeting, with an emphasis on analytical issues, and the recent experience of middle- and high-income developing countries (which have relatively low inflation to begin with, and reasonably well-functioning financial markets). After presenting a formal analytical framework, the author discusses the basic requirements for inflation targeting, and how such a regime differs from money, and exchange rate targeting regimes. After discussing the operational framework for inflation targeting (including the price index to monitor the time horizon, the forecasting procedures, and the role of asset prices), he examines recent experiences with inflation targets, providing new evidence on the convexity of the Phillips curve for six developing countries. His conclusions: Inflation targeting is a flexible policy framework that allows a country's central bank to exercise some degree of discretion, without putting in jeopardy its main objective of maintaining stable prices. In middle- and high-income developing economies that can refrain from implicit exchange rate targeting, it can improve the design, and performance of monetary policy, compared with other policy approaches that central banks may follow. Not all countries may be able to satisfy the technical requirements (such as adequate price data, adequate understanding of the links between instruments, and targets of monetary policy, and adequate forecasting capabilities), but such requirements should not be overstated. Forecasting capability can never be perfect, and sensible projections always involve qualitative judgment. More important, and often more difficult, is the task of designing, or improving an institutional framework that would allow the central bank to pursue the goal of low, stable inflation, while maintaining the ability to stabilize fluctuations in output.
Book Synopsis Monetary Policy Rules and the Exchange Rate by : Gianluca Benigno
Download or read book Monetary Policy Rules and the Exchange Rate written by Gianluca Benigno and published by . This book was released on 2001 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Non-Linearity in the Monetary Policy Rule of the Chilean Central Bank by : Pablo Gonzalez
Download or read book Non-Linearity in the Monetary Policy Rule of the Chilean Central Bank written by Pablo Gonzalez and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the evidence of non-linearities in the reaction function of the Central Bank of Chile as it relates to its final objective, inflation, and/or to its intermediate objectives defined by the monetary policy transmission channels. The study uses the flexible approach to non-linear inference proposed by Hamilton (2001), which allows the estimation of non-linear functions by using the data to determine the specific form of the non-linearity to be adopted instead of making any prior assumption of a particular functional form. It is observed that even though the Central Bank's response is linear in relation to the deviations of the inflation rate from its target, there is evidence of non-linearities with respect to the business cycle. Contrary to previous studies, in particular Corbo (2002), the current account gap does not have any predictive role in the reaction function for the period being analyzed.
Book Synopsis Are Central Banks Following a Linear or Nonlinear (Augmented) Taylor Rule? by : Vitor Castroa
Download or read book Are Central Banks Following a Linear or Nonlinear (Augmented) Taylor Rule? written by Vitor Castroa and published by . This book was released on 2010 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Taylor rule establishes a simple linear relation between the interest rate, inflation and output gap. However, this relation may not be so simple. To get a deeper understanding of the central banks' behaviour, this paper asks whether central banks are indeed following a linear Taylor rule or, instead, a nonlinear rule. At the same time, it also analyses whether that rule can be augmented with a financial conditions index containing information from some asset prices and financial variables. A forward-looking monetary policy reaction function is employed in the estimation of the linear and nonlinear models. A smooth transition model is used to estimate the nonlinear rule.The results indicate that the European Central Bank and the Bank of England tend to follow a nonlinear Taylor rule, but not the Federal Reserve of the United States. In particular, those two central banks tend to react to inflation only when inflation is above or outside their targets. Moreover, our evidence shows that the European Central Bank is targeting the financial conditions, contrary to the other two central banks. In our judgement, this lack of attention to the financial conditions might be one of the causes of the recent credit crunch that started in the United States.
Book Synopsis Inflation Targeting, Credibility and Non-linear Taylor Rules by : Matthias Neuenkirch
Download or read book Inflation Targeting, Credibility and Non-linear Taylor Rules written by Matthias Neuenkirch and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we systematically evaluate how central banks respond to inflation deviations from target. We present a stylized New Keynesian model in which agents' inflation expectations are sensitive to inflation deviations from target. To (re- )establish credibility, optimal monetary policy under discretion is shown to set higher interest rates today if average inflation exceeded the target in the past. Moreover, policy responds non-linearly to past inflation gaps. This is reflected in an additional term in the central bank's optimal instrument rule, which we refer to as the "credibility loss". Augmenting a standard Taylor (1993) rule with the latter term, we provide empirical evidence for the interest rate response for a sample of nine IT or quasi-IT economies. We find that past deviations from the inflation target are feeding back into the reaction function of seven central banks and that this influence is economically meaningful. A deteroriation in credibility forces central bankers to undertake larger interest rate steps (ceteris paribus). -- Inflation expectations ; credibility ; reaction function ; Taylor rule
