IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v41y2009i16p2065-2071.html

Quantitative goals for monetary policy: a quantile regression approach

Author

Listed:
  • Aaron Jackson
  • William Miles

Abstract

A recent paper by Fatas et al. (2006) indicates that formal monetary policy targets-exchange rate, money supply or inflation targets-palpably decrease inflation in a sample of 40 countries. The authors employ various least squares estimations, which pick up the conditional average effect. However, there is wide inflation variability in the authors' sample. Thus, formal targets could have very different effects in high- and low- inflation countries. Accordingly, we utilize the technique of quantile regression, a method frequently used in labour economics. We find, in a sample of low- and moderate-inflation countries, that formal targets exert no significant impact on low-inflation nations. This result is important for debates over formal targets, such as whether the United States should adopt an inflation target. There are costs and benefits in having formal targets, and finding that targets do not decrease inflation, when it is already moderate, is an important piece of information to consider.

Suggested Citation

  • Aaron Jackson & William Miles, 2009. "Quantitative goals for monetary policy: a quantile regression approach," Applied Economics, Taylor & Francis Journals, vol. 41(16), pages 2065-2071.
    • Handle: RePEc:taf:applec:v:41:y:2009:i:16:p:2065-2071
    DOI: 10.1080/00036840701736123
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840701736123
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036840701736123?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Teruyoshi Kobayashi, 2005. "Optimal monetary policy and the role of hybrid inflation-price-level targets," Applied Economics, Taylor & Francis Journals, vol. 37(18), pages 2119-2125.
    2. Karen Cabos & Nikolaus Siegfried, 2004. "Controlling inflation in Euroland," Applied Economics, Taylor & Francis Journals, vol. 36(6), pages 549-558.
    3. William Poole, 1969. "Optimal choice of monetary policy instruments in a simple stochastic macro model," Special Studies Papers 2, Board of Governors of the Federal Reserve System (U.S.).
    4. Antonio Fatás & Ilian Mihov & Andrew K. Rose, 2007. "Quantitative Goals for Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(5), pages 1163-1176, August.
    5. William Poole, 1970. "Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(2), pages 197-216.
    6. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    7. James Heckman, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    8. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
    9. Peter Mikek, 2004. "Inflation targeting and switch of fiscal regime in New Zealand," Applied Economics, Taylor & Francis Journals, vol. 36(2), pages 165-172.
    10. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    11. Hakan Berument & Richard Froyen, 1998. "Potential information and target variables for UK monetary policy," Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 449-463.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lin, Hsin-Yi, 2016. "Do quantitative monetary targets matter?," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 415-428.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. SCHELLEKENS, Philip, 1999. "Optimal monetary policy delegation to conservative central banks," Working Papers 1999009, University of Antwerp, Faculty of Business and Economics.
    2. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777, August.
    3. Rahman, Mustafizur & Al-Hasan, Md., 2018. "Male-Female wage gap and informal employment in Bangladesh: A quantile regression approach," MPRA Paper 90131, University Library of Munich, Germany.
    4. K. Cuthbertson & D. Nitzsche & S. Hyde, 2007. "Monetary Policy And Behavioural Finance," Journal of Economic Surveys, Wiley Blackwell, vol. 21(5), pages 935-969, December.
    5. Schellekens, Philip, 2000. "Caution and conservatism in the making of monetary policy," Working Paper Series 25, European Central Bank.
    6. Bassam Fattouh & Laurence Harris & Pasquale Scaramozzino, 2008. "Non-linearity in the determinants of capital structure: evidence from UK firms," Empirical Economics, Springer, vol. 34(3), pages 417-438, June.
    7. Timonen, Jouni, 1995. "Nominal income as an intermediate target for monetary policy," Bank of Finland Research Discussion Papers 21/1995, Bank of Finland.
    8. Kaushal, Kaushalendra Kumar, 2014. "Pathway from nutrition intake to wage among elementary workers in India," MPRA Paper 56652, University Library of Munich, Germany.
    9. Carl E. Walsh, 2015. "Day Two Keynote Address: Goals and Rules in Central Bank Design," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 295-352, September.
    10. Daniel Pollmann & Thomas Dohmen & Franz Palm, 2020. "Robust Estimation of Wage Dispersion with Censored Data: An Application to Occupational Earnings Risk and Risk Attitudes," De Economist, Springer, vol. 168(4), pages 519-540, December.
    11. Carl Walsh, 2015. "Goals and Rules in Central Bank Design," CESifo Working Paper Series 5293, CESifo.
    12. Ben Tomlin & Loretta Fung, 2015. "Exchange Rate Movements and the Distribution of Productivity," Review of International Economics, Wiley Blackwell, vol. 23(4), pages 782-809, September.
    13. E. Pastrapa & C. Apostolopoulos, 2015. "Estimating Determinants of Borrowing: Evidence from Greece," Journal of Family and Economic Issues, Springer, vol. 36(2), pages 210-223, June.
    14. Tsani, Stella, 2015. "On the relationship between resource funds, governance and institutions: Evidence from quantile regression analysis," Resources Policy, Elsevier, vol. 44(C), pages 94-111.
    15. Cover, James P. & VanHoose, David D., 2000. "Political pressures and the choice of the optimal monetary policy instrument," Journal of Economics and Business, Elsevier, vol. 52(4), pages 325-341.
    16. Li, Ming-Yuan Leon, 2009. "Value or volume strategy?," Finance Research Letters, Elsevier, vol. 6(4), pages 210-218, December.
    17. Horvath, Julius, 2003. "Optimum currency area theory: A selective review," BOFIT Discussion Papers 15/2003, Bank of Finland Institute for Emerging Economies (BOFIT).
    18. Zhang, Jian & Mishra, Ashok K. & Hirsch, Stefan & Li, Xiaoshun, 2020. "Factors affecting farmland rental in rural China: Evidence of capitalization of grain subsidy payments," Land Use Policy, Elsevier, vol. 90(C).
    19. Medina, Eva & Vicéns, José, 2011. "Factores determinantes de la demanda eléctrica de los hogares en España: una aproximación mediante regresión cuantílica/Determinants of Household Electricity Demand in Spain: An Approach through Quant," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 29, pages 515-538, Agosto.
    20. Huang, Wen-Hsiu, 2015. "The determinants of household electricity consumption in Taiwan: Evidence from quantile regression," Energy, Elsevier, vol. 87(C), pages 120-133.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:41:y:2009:i:16:p:2065-2071. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.