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Inflation zone targeting and the Federal Reserve

  • Tachibana, Minoru

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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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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  1. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 33(1), pages 125-132.
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