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http://bura.brunel.ac.uk/handle/2438/709
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| Title: | Testing the Opportunistic Approach to Monetary Policy |
| Authors: | Martin, C
Milas, C |
| Keywords: | Monetary policy
Zone of discretion
Intermediate inflation target |
| Publication Date: | 2006 |
| Publisher: | Brunel University |
| Citation: | Brunel Business School Economics and Finance Working Papers, 06/2006 |
| Series/Report no.: | Brunel Business School;Brunel Business School Working Papers |
| Abstract: | The Opportunistic Approach to Monetary Policy is an influential but untested model of optimal
monetary policy. We provide the first tests of the model, using US data from 1983Q1-2004Q1.
Our results support the Opportunistic Approach. We find that policymakers respond to the gap
between inflation and an intermediate target that reflects the recent history of inflation. We find
that there is no response of interest rates to inflation when inflation is within 1% of the
intermediate target but a strong response when inflation is further from the intermediate target. |
| URI: | http://bura.brunel.ac.uk/handle/2438/709 |
| Appears in Collections: | School of Social Sciences Research Papers
Brunel Business School Research Papers
Economics and Finance
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