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http://bura.brunel.ac.uk/handle/2438/1003| Title: | Testing the opportunistic approach to monetary policy |
| Authors: | Martin, C Milas, C |
| Keywords: | monetary policy, zone of discretion, intermediate inflation target. |
| Issue Date: | 2006 |
| Publisher: | Brunel University |
| Citation: | Economics and Finance Discussion Paper, Brunel University, 06-26 |
| 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/2438/1003 |
| Appears in Collections: | Economics and Finance Dept of Economics and Finance Research Papers |
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