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Does Institutional Change Really Matter? Inflation Targets, Central Bank Reform And Interest Rate Policy In The Oecd Countries

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Author Info
Anton Muscatelli
Patrzio Tirelli
Carmine Trecroci

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Abstract

We estimate forward-looking interest-rate reaction functions for the G3 economies and for a group of countries which recently adopted inflation targets. Some significant shifts in the conduct of monetary policy are detected in the G3 countries, especially in the USA and Japan. In contrast with popular wisdom, it is only since the 1990s that policies in these countries begin to look consistent with an inflation-targeting regime. In addition, the introduction of inflation targeting and central bank reforms in countries like Sweden, Canada and New Zealand has not led to major changes in the way in which central banks react to the objectives of economic policy. In all cases changes in policy behaviour pre-date the introduction of inflation targets and central bank reforms. The paper challenges the one-size-fits-all attitude towards modern central bank policymaking which permeates a great deal of the current literature.

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Paper provided by Department of Economics, University of Glasgow in its series Working Papers with number 1999_20.

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Date of creation: Mar 1998
Date of revision: Jul 1999
Handle: RePEc:gla:glaewp:1999_20

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Find related papers by JEL classification:
E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Patrizio Tirelli & V. Anton Muscatelli & Carmine Trecroci, 2004. "The interaction of fiscal and monetary policies: some evidence using structural econometric models'," Money Macro and Finance (MMF) Research Group Conference 2003 103, Money Macro and Finance Research Group. [Downloadable!]
  2. Toshitaka Sekine & Yuki Teranishi, 2008. "Inflation Targeting and Monetary Policy Activism," IMES Discussion Paper Series 08-E-13, Institute for Monetary and Economic Studies, Bank of Japan. [Downloadable!]
  3. Alexander Mihailov, 2005. "Has More Independence Affected Bank of England's Reaction Function under Inflation Targeting? Lessons from Taylor Rule Empirics," Economics Discussion Papers 601, University of Essex, Department of Economics. [Downloadable!]
  4. V. Anton Muscatelli & Patrizio Tirelli & Carmine Trecroci, 2002. "Monetary Policy on the Road to EMU: The Dominance of External Constraints on Domestic Objectives," Annales d'Economie et de Statistique, ADRES, issue 67-68, pages 13, Juillet-D. [Downloadable!]
  5. V. Anton Muscatelli & Patrizio Tirelli, 2004. "Analyzing the Interaction of Monetary and Fiscal Policy: Does Fiscal Policy Play a Valuable Role in Stabilisation?," Working Papers 2005_17, Department of Economics, University of Glasgow, revised Jun 2005. [Downloadable!]
  6. Alex Cukierman & Anton Muscatelli, 2001. "Do Central Banks have Precautionary Demands for Expansions and for Price Stability?," Working Papers 2002_4, Department of Economics, University of Glasgow, revised Mar 2002. [Downloadable!]
  7. Carmine Trecroci & Matilde Vassalli, 2006. "Monetary policy regime shifts: new evidence from time-varying interest rate rules," Working Papers 0602, University of Brescia, Department of Economics. [Downloadable!]
  8. Anton Muscatelli & Patrizio Tirelli & Carmine Trecroci, 2001. "Monetary and Fiscal Policy Interactions over the Cycle: Some Empirical Evidence," Working Papers 2002_13, Department of Economics, University of Glasgow, revised Oct 2002. [Downloadable!]
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  9. Lee , Jim & Crowley, Patrick M, 2009. "Evaluating the stresses from ECB monetary policy in the euro area," Research Discussion Papers 11/2009, Bank of Finland. [Downloadable!]
  10. V. Anton Muscatelli & Tiziano Ropele & Patrizio Tirelli, 2004. "Macroeconomic Adjustment in the Euro-area: The Role of Fiscal Policy," Working Papers 2005_20, Department of Economics, University of Glasgow, revised May 2005. [Downloadable!]
  11. Cukierman, Alex & Muscatelli, V. Anton, 2002. "Do Central Banks have Precautionary Demands for Expansions and for Price Stability? -- Theory and Evidence," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  12. Andrea Colciago & Anton Muscatelli & Tiziano Ropele & Patrizio Tirelli, 2006. "The Role of Fiscal Policy in a Monetary Union: Are National Automatic Stabilizers Effective?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  13. Nelson, Edward, 2001. "UK Monetary Policy 1972-97: A Guide Using Taylor Rules," CEPR Discussion Papers 2931, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
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