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Uncertainty and UK Monetary Policy

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Author Info
Christopher Martin (Department of Economics and Finance, Brunel University)
Costas Milas (Department of Economics, City University, London)

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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 evidence 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.

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Paper provided by Department of Economics, City University, London in its series City University Economics Discussion Papers with number 04/05.

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Date of creation: Apr 2004
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Handle: RePEc:cty:dpaper:0405

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Related research
Keywords: monetary policy; uncertainty;

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Find related papers by JEL classification:
C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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