What does monetary policy reveal about central bank's preferences?

Arbeitspapier

The design of monetary policy depends upon the targeting strategy adopted by the central bank. This strategy describes a set of policy preferences, which are actually the structural parameters to analyse monetary policy making. Accordingly, we develop a novel calibration method to identify central bank's preferences from the estimates of an optimal Taylor-type rule. The empirical analysis on US data shows that output stabilization has not been an independent argument in the Fed's objective function during the Greenspan era. This suggests that the output gap has entered the policy rule only as leading indicator for future inflation, therefore being only instrumental (to stabilize inflation) rather than important per se.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 2.2002

Classification and Topics

• Classification: Wirtschaft ; Optimization Techniques; Programming Models; Dynamic Analysis ; Monetary Policy ; Central Banks and Their Policies
• Subject: Central bank's preferences ; calibration ; inflation targeting ; optimal monetary policy ; Geldpolitik ; Regelbindung ; Inflationssteuerung ; Taylor-Regel ; Kontrolltheorie ; Theorie ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Castelnuovo, Efrem ; Surico, Paolo
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/119611
• Last update: 10.03.2025, 11:43 AM CET