Nonlinear Monetary Policy Reaction with Asymmetric Central Bank Preferences : Some Evidence for Korea
The paper considers asymmetric central bank preferences and nonlinear AS curve in the monetary policy reaction function to examine nonlinear property of monetary policy rules. The optimal monetary policy rules are derived in a new Keynesian macroeconomic framework where the central bank has the asymmetric objective function. The derived reaction function explains the nonlinearr eaction to the inflation gap and the output gap. The nonlinearr eaction function is applied to explain the determination of the interest rate in Korea for the sample peroid of inflation targeting September 1998 to December 2005. The empirical evidence supports that the objective of the central bank is asymmetric in inflation management. The evidence of asymmetric reaction to the output gap is relatively weak. The empirical analysis reveals that the central bank responds strongly to the positive inflation gap compared to the negative inflation gap.
Volume (Year): 49 (2008)
Issue (Month): 2 (December)
|Contact details of provider:|| Phone: +81-42-580-8000|
Web page: http://www.econ.hit-u.ac.jp/
More information through EDIRC
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.:
- Alvaro Aguiar & Manuel Martins, 2008.
"Testing for asymmetries in the preferences of the euro-area monetary policymaker,"
Taylor & Francis Journals, vol. 40(13), pages 1651-1667.
- Manuel M F Martins & Alvaro Aguiar, 2005. "Testing for Asymmetries in the Preferences of the Euro-Area Monetary Policymaker," Money Macro and Finance (MMF) Research Group Conference 2005 41, Money Macro and Finance Research Group.
- Alvaro Aguiar & Manuel M. F. Martins, 2005. "Testing for Asymmetries in the Preferences of the Euro-Area Monetary Policymaker," FEP Working Papers 182, Universidade do Porto, Faculdade de Economia do Porto.
- Bec Frédérique & Ben Salem Mélika & Collard Fabrice, 2002. "Asymmetries in Monetary Policy Reaction Function: Evidence for U.S. French and German Central Banks," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 6(2), pages 1-22, July.
- Richard Clarida & Jordi Gali & Mark Gertler, 1997.
"Monetary Policy Rules in Practice: Some International Evidence,"
NBER Working Papers
6254, National Bureau of Economic Research, Inc.
- Clarida, Richard & Gali, Jordi & Gertler, Mark, 1998. "Monetary policy rules in practice Some international evidence," European Economic Review, Elsevier, vol. 42(6), pages 1033-1067, June.
- Clarida, Richard & Galí, Jordi & Gertler, Mark, 1997. "Monetary Policy Rules in Practice: Some International Evidence," CEPR Discussion Papers 1750, C.E.P.R. Discussion Papers.
- Clarida, Richard & Gali, Jordi & Gertler, Mark, 1997. "Monetary Policy Rules in Practice: Some International Evidence," Working Papers 97-32, C.V. Starr Center for Applied Economics, New York University.
When requesting a correction, please mention this item's handle: RePEc:hit:hitjec:v:49:y:2008:i:2:p:91-108. 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: (Digital Resources Section, Hitotsubashi University Library)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.