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Forecast-Based Monetary Policy: The Case of Sweden

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  • Jansson, Per
  • Vredin, Anders

Abstract

Central banks are dominant players in financial markets and economic policy. For both democratic and efficiency reasons, it is important that central banks' actions can be understood, predicted, and evaluated. Inflation-targeting central banks that publish their forecasts provide unique opportunities for detailed studies of monetary policy based on real-time data. This paper demonstrates how a central bank's forecasts can be used to identify two different forms of discretionary monetary policy: "policy shocks" (deviations from systematic policy) and "judgements" in forecasting. Copyright 2003 by Blackwell Publishers Ltd.

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  • Jansson, Per & Vredin, Anders, 2003. "Forecast-Based Monetary Policy: The Case of Sweden," International Finance, Wiley Blackwell, vol. 6(3), pages 349-380, Winter.
  • Handle: RePEc:bla:intfin:v:6:y:2003:i:3:p:349-80
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    References listed on IDEAS

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    Cited by:

    1. Pierre Siklos & Martin Bohl, 2009. "Asset Prices as Indicators of Euro Area Monetary Policy: An Empirical Assessment of Their Role in a Taylor Rule," Open Economies Review, Springer, vol. 20(1), pages 39-59, February.
    2. Lundholm, Michael, 2010. "Sveriges Riksbank's Inflation Interval Forecasts 1999-2005," Research Papers in Economics 2010:11, Stockholm University, Department of Economics.
    3. Baxa, Jaromír & Horváth, Roman & Vašíček, Bořek, 2014. "How Does Monetary Policy Change? Evidence On Inflation-Targeting Countries," Macroeconomic Dynamics, Cambridge University Press, vol. 18(03), pages 593-630, April.
    4. Marco Vega, 2006. "Skewed policy responses and IT in Latin America," Computing in Economics and Finance 2006 61, Society for Computational Economics.
    5. repec:rim:rimwps:32-07 is not listed on IDEAS
    6. Lars E.O. Svensson, 2015. "Day One Keynote Address: Forward Guidance," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 19-64, September.
    7. Leitemo, Kai, 2006. "Targeting inflation by forecast feedback rules in small open economies," Journal of Economic Dynamics and Control, Elsevier, vol. 30(3), pages 393-413, March.
    8. Lundholm, Michael, 2010. "Are Inflation Forecasts from Major Swedish Forecasters Biased?," Research Papers in Economics 2010:10, Stockholm University, Department of Economics.
    9. Lars E.O. Svensson, 2014. "Forward Guidance," NBER Working Papers 20796, National Bureau of Economic Research, Inc.
    10. Charles Goodhart, 2009. "The Interest Rate Conditioning Assumption," International Journal of Central Banking, International Journal of Central Banking, vol. 5(2), pages 85-108, June.
    11. Lars E. O. Svensson, 2007. "Optimal inflation Targeting: Further Developments of Inflation Targeting," Central Banking, Analysis, and Economic Policies Book Series,in: Frederic S. Miskin & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Monetary Policy under Inflation Targeting, edition 1, volume 11, chapter 6, pages 187-225 Central Bank of Chile.
    12. Michael Woodford, 2005. "Central bank communication and policy effectiveness," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 399-474.
    13. Goodhart, Charles, 2005. "The interest rate conditioning assumption," LSE Research Online Documents on Economics 24666, London School of Economics and Political Science, LSE Library.
    14. Lars E. O. Svensson, 2015. "The Possible Unemployment Cost of Average Inflation below a Credible Target," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(1), pages 258-296, January.
    15. Michael Woodford, 2007. "The Case for Forecast Targeting as a Monetary Policy Strategy," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 3-24, Fall.
    16. Svensson, Lars E.O., 2010. "Inflation Targeting," Handbook of Monetary Economics,in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 22, pages 1237-1302 Elsevier.
    17. Janko Gorter & Jan Jacobs & Jakob de Haan, 2007. "Taylor Rules for the ECB using Consensus Data," DNB Working Papers 160, Netherlands Central Bank, Research Department.
    18. Goodhart Charles A.E., 2005. "The Monetary Policy Committee's Reaction Function: An Exercise in Estimation," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-42, August.
    19. Woodford, Michael, 2013. "Forward Guidance by Inflation-Targeting Central Banks," CEPR Discussion Papers 9722, C.E.P.R. Discussion Papers.
    20. Lars E.O. Svensson, 2006. "The Instrument-Rate Projection under Inflation Targeting: The Norwegian Example," Working Papers 75, Princeton University, Department of Economics, Center for Economic Policy Studies..
    21. Michael Woodford, 2012. "Forecast Targeting as a Monetary Policy Strategy - Policy Rules in Practice," Book Chapters,in: Evan F. Koenig & Robert Leeson & George A. Kahn (ed.), The Taylor Rule and the Transformation of Monetary Policy, chapter 9 Hoover Institution, Stanford University.
    22. repec:pri:cepsud:127svensson is not listed on IDEAS
    23. Berg, Claes & Jansson, Per & Vredin, Anders, 2004. "How Useful are Simple Rules for Monetary Policy? The Swedish Experience," Working Paper Series 169, Sveriges Riksbank (Central Bank of Sweden).

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