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Please use this identifier to cite or link to this item: http://bura.brunel.ac.uk/handle/2438/955

Title: Uncertainty and UK Monetary Policy
Authors: Martin, C
Milas, C
Keywords: monetary policy, uncertainty
Publication Date: 2004
Publisher: Brunel University
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.
URI: http://bura.brunel.ac.uk/handle/2438/955
Appears in Collections:School of Social Sciences Research Papers
Economics and Finance

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