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Monetary policy with forward-looking rules: The Swiss case

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Abstract

We estimate monetary policy rules in Switzerland for 1981-1997. In addition to an inflation gap, we find that forward-looking rules with output and exchange rate gaps nicely fit monetary aggregates as well as the call rate. We split the sample in 1990 when the Swiss National Bank replaced annual targets by medium-term targets for its official policy instrument, the monetary base. We find then that our rule best describes M0 and M1 before 1990 and only the call rate after 1990. Moreover, such small open economy rules are robust with respect to diffenernt central bank information sets.

Suggested Citation

  • Nicolas A. Cuche, 2000. "Monetary policy with forward-looking rules: The Swiss case," Working Papers 00.10, Swiss National Bank, Study Center Gerzensee.
  • Handle: RePEc:szg:worpap:0010
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    Cited by:

    1. International Monetary Fund, 2001. "Switzerland; Selected Issues," IMF Staff Country Reports 01/75, International Monetary Fund.
    2. Vdovichenko, Anna G. & Voronina, Victoria G., 2006. "Monetary policy rules and their application in Russia," Research in International Business and Finance, Elsevier, vol. 20(2), pages 145-162, June.
    3. Nikolay Markov & Thomas Nitschka, 2013. "Estimating Taylor Rules for Switzerland: Evidence from 2000 to 2012," Working Papers 2013-08, Swiss National Bank.
    4. Alexander Perruchoud, 2009. "Estimating a Taylor Rule with Markov Switching Regimes for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 145(II), pages 187-220, June.
    5. Thomas Nitschka & Nikolay Markov, 2016. "Semi-Parametric Estimates of Taylor Rules for a Small, Open Economy – Evidence from Switzerland," German Economic Review, Verein für Socialpolitik, vol. 17(4), pages 478-490, November.
    6. Vdovichenko Anna & Voronina Victoria, 2004. "Monetary policy rules and their application in Russia," EERC Working Paper Series 04-09e, EERC Research Network, Russia and CIS.
    7. Marwan Elkhoury, 2005. "A Time-Varying Parameter Model of A Monetary Policy Rule for Switzerland. The Case of the Lucas and Friedman Hypothesis," IHEID Working Papers 01-2006, Economics Section, The Graduate Institute of International Studies.

    More about this item

    Keywords

    Exchange rate; Monetary policy instrument; Output gap; Robustness; Rule; Switzerland.;

    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

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