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A simple Empirical Measure of Central Bank's Conservatism

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  • Grégory Levieuge

    ()
    (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans)

  • Yannick Lucotte

    ()
    (LEO - Laboratoire d'économie d'Orleans - CNRS : UMR7322 - Université d'Orléans)

Abstract

In this paper we suggest a simple empirical and model independent measure of Central Banks' Conservatism, based on the Taylor curve. This new indicator can easily be extended in time and space, whatever the underlying monetary regime of the considered countries. We demonstrate that it evolves in accordance with the monetary experiences of 32 OECD member countries from 1980, and is largely equivalent to the model-based measure provided by Krause & M endez [Southern Economic Journal, 2005]. We nally bring forward the interest of such an indicator for further empirical analysis dealing with the preferences of Central Banks.

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Paper provided by HAL in its series Working Papers with number halshs-00827680.

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Date of creation: 04 May 2012
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Handle: RePEc:hal:wpaper:halshs-00827680

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Keywords: Central Banks' preferences; Conservatism; Taylor curve; Taylor rule;

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