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Revealing monetary policy preferences

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Abstract

This paper uses multiple criteria decision making, also termed conjoint analysis,to reveal the preferences of central bank policy-makers at the Reserve Bank of New Zealand. Guided by the Policy Targets Agreement between the Governor of the Reserve Bank and the Minister of Finance, we identify policy-makers’ willingness to trade off inflation outcomes for reductions in volatility in GDP, the exchange rate, and interest rates. Using 1000Minds software, policy-makers are presented with a sequence of pairwise choices that ultimately quantify which macroeconomic attributes are most important to them. The paper also distinguishes between the preferences of senior management, and a broader cross-section of economists and other staff.

Suggested Citation

  • Christie Smith, 2009. "Revealing monetary policy preferences," Reserve Bank of New Zealand Discussion Paper Series DP2009/01, Reserve Bank of New Zealand.
  • Handle: RePEc:nzb:nzbdps:2009/01
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    File URL: http://rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Discussion%20papers/2009/dp09-01.pdf
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    References listed on IDEAS

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    17. John C. Robertson & Ellis W. Tallman, 1999. "Vector autoregressions: forecasting and reality," Economic Review, Federal Reserve Bank of Atlanta, pages 4-18.
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    Cited by:

    1. Paul Hansen & Nicole Kergozou & Stephen Knowles & Paul Thorsnes, 2014. "Developing Countries in Need: Which Characteristics Appeal Most to People when Donating Money?," Journal of Development Studies, Taylor & Francis Journals, pages 1494-1509.
    2. Paul Hansen & Nicole Kergozou & Stephen Knowles & Paul Thorsnes, 2014. "Developing Countries in Need: Which Characteristics Appeal Most to People when Donating Money?," Journal of Development Studies, Taylor & Francis Journals, pages 1494-1509.
    3. Juan Paez-Farrell, 2015. "Taylor rules, central bank preferences and inflation targeting," Working Papers 2015023, The University of Sheffield, Department of Economics.

    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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