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Nonlinear Monetary Policy Rules: Some New Evidence For The Us

  • J. J. Dolado

    ()

  • R. Maria-Dolores

    ()

  • F. J. Ruge-Murcia

    ()

This paper dreives optimal monetary policy rules in setups where certainty equivalence does not hold because either central bank preferences are not quadratic, and/or the aggregate supply relation is nonlinear. Analytical results show that these features lead to sign and size aymmetries, and nonlinearities in the policy rule. Reduced-form estimates indicate that US monetary policy can be characterized by a nonlinear policy rule after 1983, but not before 1979. This finding is consistent with the view that the Fed`s inflation preferences during the Volcker-Greenspan regime differ considerably from the ones during the Burns-Miller regime.

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Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we022910.

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Date of creation: May 2002
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Handle: RePEc:cte:werepe:we022910
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  8. DOLADO, J.J. & MARIA-DOLORES, R. & RUGE-MURCIA, Francisco J., 2003. "Nonlinear Monetary Policy Rules: Some New Evidence for the U.S," Cahiers de recherche 2003-24, Universite de Montreal, Departement de sciences economiques.
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