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Inflation zone targeting and the Federal Reserve

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  • Tachibana, Minoru

Abstract

The purpose of this paper is to examine whether the Federal Reserve (the Fed) implicitly implemented an inflation zone targeting policy. To this end, I estimate the piecewise linear Taylor rule, in which the magnitude of the inflation coefficient depends on whether inflation lies within or outside a target zone. The estimation results show that the Fed conducted an inflation zone targeting policy during the 1987-2004 period. In addition, it is found that a symmetric (not asymmetric) specification of the piecewise linear rule is adequate to describe the inflation zone targeting behavior of the Fed. J. Japanese Int. Economies 22 (1) (2008) 68-84.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 22 (2008)
Issue (Month): 1 (March)
Pages: 68-84

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Handle: RePEc:eee:jjieco:v:22:y:2008:i:1:p:68-84

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Web page: http://www.elsevier.com/locate/inca/622903

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References

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  6. Svensson, L-E-O, 1997. "Inflation Targeting : Some Extensions," Papers, Stockholm - International Economic Studies 625, Stockholm - International Economic Studies.
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  11. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, Elsevier, vol. 39(1), pages 195-214, December.
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  13. Tachibana, Minoru, 2006. "Did the Bank of Japan have a target zone for the inflation rate?," Economics Letters, Elsevier, Elsevier, vol. 92(1), pages 131-136, July.
  14. Orphanides, Athanasios & Wieland, Volker, 2000. "Inflation zone targeting," European Economic Review, Elsevier, Elsevier, vol. 44(7), pages 1351-1387, June.
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Cited by:
  1. Luiz de Mello & Diego Moccero & Matteo Mogliani, 2009. "Do Latin American Central Bankers Behave Non-Linearly?: The Experiences of Brazil, Chile, Colombia and Mexico," OECD Economics Department Working Papers, OECD Publishing 679, OECD Publishing.
  2. Tachibana, Minoru, 2006. "Did the Bank of Japan have a target zone for the inflation rate?," Economics Letters, Elsevier, Elsevier, vol. 92(1), pages 131-136, July.
  3. Srinivasan, Naveen & Kumar, Sudhanshu, 2012. "Zone-quadratic preference, asymmetry and international reserve accretion in India: An empirical investigation," Journal of International Financial Markets, Institutions and Money, Elsevier, Elsevier, vol. 22(2), pages 253-263.

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