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|Title:||Uncertainty and UK Monetary Policy|
|Keywords:||monetary policy, uncertainty|
|Citation:||Economics and Finance Working papers, Brunel University, 04-11|
|Abstract:||This paper provides empirical evidence on the response of monetary policymakers to uncertainty. Using data for the UK since the introduction of inflation targets in October 1992, we find that the impact of inflation on interest rates is lower when inflation is more uncertain and is larger when the output gap is more uncertain. These findings are consistent with the predictions of the theoretical literature. We also find that uncertainty has reduced the volatility but has not affected the average value of interest rates and argue that monetary policy would have been less passive in the absence of uncertainty.|
|Appears in Collections:||Economics and Finance|
Dept of Economics and Finance Research Papers
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