Testing The Opportunistic Approach To Monetary Policy
AbstractThe 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 to 2004Q1. Our results support the opportunistic approach. We find that policy-makers 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 per cent of the intermediate target but a strong response when inflation is further from the intermediate target. Copyright � 2010 The Authors. Journal compilation � 2010 Blackwell Publishing Ltd and The University of Manchester.
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Bibliographic InfoArticle provided by University of Manchester in its journal The Manchester School.
Volume (Year): 78 (2010)
Issue (Month): 2 (03)
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Other versions of this item:
- Christopher Martin & Costas Milas, 2007. "Testing the Opportunistic Approach to Monetary Policy," Keele Economics Research Papers KERP 2007/02, Centre for Economic Research, Keele University.
- Martin, Chris & Milas, Costas, 2006. "Testing the Opportunistic Approach to Monetary Policy," MPRA Paper 849, University Library of Munich, Germany.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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