Targets, Zones and Asymmetries:A Flexible Nonlinear Model of Recent UK Monetary Policy
We estimate a flexible model of the behaviour of UK monetary policymakers in the era of inflation targeting based on a new representation of policymaker’s preferences. This enables us to address a range of issues that are beyond the scope of the existing literature. We find a complex relationship between interest rates and inflation: interest rates are passive when inflation is close to the target but there is an increasingly vigorous response as inflation deviates further from the target. We also find that the response to the output gap is linear and find no evidence of a nonlinear Phillips curve.
|Date of creation:||Oct 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
When requesting a correction, please mention this item's handle: RePEc:bru:bruedp:05-21. 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: (John.Hunter)
If references are entirely missing, you can add them using this form.