Asymmetric central bank's preference and inflation rate in Jordan
Purpose - The purpose of this paper is to examine the hypothesis that a central bank's asymmetric preferences are able to explain inflation rate in a developing country. In addition, it seeks to help comprehend movements of inflation rate in Jordan and to understand Central Bank of Jordan preferences regarding inflation rate and output. Design/methodology/approach - A standard monetary model consists of a central bank's loss function and an economy structure is constructed, which acts as a constraint on the central bank's behavior. Then, a distribute-lag version of the derived model is estimated using ordinary least squares method. Findings - The empirical evidence from the Jordanian economy shows that inflation rate relies on the variances of inflation rate and the variances of output. This finding supports the hypothesis that a central bank's asymmetric loss function is able to justify inflation rate movements. Moreover, the Jordanian central banker prefers higher inflation rate and higher level of output. Originality/value - The paper provides evidence from a developing country regarding the ability of the asymmetric central bank preferences to justify inflation rate movement. In addition, the paper links central banks' losses with the uncertainty level and inflation rate in the economy.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 26 (2009)
Issue (Month): 4 (October)
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://emeraldgrouppublishing.com/products/journals/journals.htm?id=sef Email:
References listed on IDEAS
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.:
- Richard Clarida & Jordi Gali & Mark Gertler, 1999.
"The Science of Monetary Policy: A New Keynesian Perspective,"
NBER Working Papers
7147, National Bureau of Economic Research, Inc.
- Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
- Clarida, R. & Gali, J. & Gertler, M., 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Working Papers 99-13, C.V. Starr Center for Applied Economics, New York University.
- Clarida, Richard & Galí, Jordi & Gertler, Mark, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," CEPR Discussion Papers 2139, C.E.P.R. Discussion Papers.
- Richard Clarida & Jordi Galí & Mark Gertler, 1997. "The science of monetary policy: A new Keynesian perspective," Economics Working Papers 356, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 1999.
- Alex Cukierman & Anton Muscatelli, 2001. "Do Central Banks have Precautionary Demands for Expansions and for Price Stability?," Working Papers 2002_4, Business School - Economics, University of Glasgow, revised Mar 2002.
- A. Robert Nobay & David A. Peel, 2003. "Optimal Discretionary Monetary Policy in a Model of Asymmetric Central Bank Preferences," Economic Journal, Royal Economic Society, vol. 113(489), pages 657-665, 07.
- Ruge-Murcia, Francisco J., 2004.
"The inflation bias when the central bank targets the natural rate of unemployment,"
European Economic Review,
Elsevier, vol. 48(1), pages 91-107, February.
- RUGE-MURCIA, Francisco J., 2001. "The Inflation Bias When the Central Bank Targets, the Natural Rate of Unemployment," Cahiers de recherche 2001-22, Universite de Montreal, Departement de sciences economiques.
- Doyle, Matthew & Falk, Barry L., 2006.
"Do Asymmetric Central Bank Preferences Help Explain Observed Inflation Outcomes?,"
Staff General Research Papers Archive
12501, Iowa State University, Department of Economics.
- Doyle, Matthew & Falk, Barry, 2010. "Do asymmetric central bank preferences help explain observed inflation outcomes?," Journal of Macroeconomics, Elsevier, vol. 32(2), pages 527-540, June.
- Matthew Doyle & Barry Falk, 2009. "Do Asymmetric Central Bank Preferences Help Explain Observed Inflation Outcomes?," Working Papers 0902, University of Waterloo, Department of Economics, revised Feb 2009.
- Osama Sweidan & Aktham Maghyereh, 2006. "Monetary policy and the central bank's securities," Applied Economics Letters, Taylor & Francis Journals, vol. 13(9), pages 593-598.
- RUGE-MURCIA, Francisco .J., 2001.
"Inflation Targeting Under Asymmetric Preferences,"
Cahiers de recherche
2001-04, Universite de Montreal, Departement de sciences economiques.
- Ruge-Murcia, F.J., 2001. "Inflation Targeting Under Asymmetric Preferences," Cahiers de recherche 2001-04, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Francisco J. Ruge-Murcia, 2001. "Inflation Targeting Under Asymmetric Preferences," Working Papers 0106, Banco de España;Working Papers Homepage.
- Francisco Javier Ruge-Murcia, 2001. "Inflation Targeting Under Asymmetric Preferences," IMF Working Papers 01/161, International Monetary Fund.
- Tushar Poddar & Hasmik V Khachatryan & Randa Sab, 2006. "The Monetary Transmission Mechanism in Jordan," IMF Working Papers 06/48, International Monetary Fund.
- Glenn D. Rudebusch, 2006.
"Monetary Policy Inertia: Fact or Fiction?,"
International Journal of Central Banking,
International Journal of Central Banking, vol. 2(4), December.
- CHADHA, Jagjit & SCHELLEKENS, Philip, "undated".
"Monetary policy loss functions: two cheers for the quadratic,"
1999002, University of Antwerp, Faculty of Applied Economics.
- Jagjit Chadha & Philip Schellekens, 1999. "Monetary policy loss functions: two cheers for the quadratic," Bank of England working papers 101, Bank of England.
- Schellekens, P. & Chadha, J.S., 1999. "Monetary Policy Loss Functions: Two Cheers for the Quadratic," Cambridge Working Papers in Economics 9920, Faculty of Economics, University of Cambridge.
- Gali, Jordi & Gertler, Mark, 1999.
"Inflation dynamics: A structural econometric analysis,"
Journal of Monetary Economics,
Elsevier, vol. 44(2), pages 195-222, October.
- Jordi Galí & Mark Gertler, 1998. "Inflation dynamics: A structural econometric analysis," Economics Working Papers 341, Department of Economics and Business, Universitat Pompeu Fabra.
- Jordi Gali & Mark Gertler, 2000. "Inflation Dynamics: A Structural Econometric Analysis," NBER Working Papers 7551, National Bureau of Economic Research, Inc.
- Taylor, John B., 1980. "Output and price stability: An international comparison," Journal of Economic Dynamics and Control, Elsevier, vol. 2(1), pages 109-132, May.
- Alex Cukierman & V. Anton Muscatelli, 2002. "Do Central Banks have Precautionary Demands for Expansions and for Price Stability? - Theory and Evidence," CESifo Working Paper Series 764, CESifo Group Munich.
- Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
- Osama Sweidan, 2008. "The Asymmetric Loss Function and the Central Banks' Ability in Developing Countries," Global Economic Review, Taylor & Francis Journals, vol. 37(3), pages 387-403.
When requesting a correction, please mention this item's handle: RePEc:eme:sefpps:v:26:y:2009:i:4:p:232-245. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginia Chapman)
If references are entirely missing, you can add them using this form.