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Title: Targets, Zones and Asymmetries: A Flexible Nonlinear model of Recent UK Monetary Policy
Authors: Boinet, V
Martin, C
Keywords: Monetary policy;Nonlinearity
Issue Date: 2005
Publisher: Brunel Business School
Citation: Brunel Business School Economics and Finance Working Papers, 05/21, Oct 2005
Series/Report no.: Economics and Finance Working Papers;05/21
Abstract: We estimate a flexible model of the behaviour of UK monetary policymakers in the era of inflation targeting based on a new representation of policymaker’s preferences. This enables us to address a range of issues that are beyond the scope of the existing literature. We find a complex relationship between interest rates and inflation: interest rates are passive when inflation is close to the target but there is an increasingly vigorous response as inflation deviates further from the target. We also find that the response to the output gap is linear and find no evidence of a nonlinear Phillips curve.
Appears in Collections:Economics and Finance
Dept of Economics and Finance Research Papers

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