Discussion Paper Details

Please find the details for DP12833 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Central Banks Going Long

Author(s): Ricardo Reis

Publication Date: March 2018

Keyword(s): affine models, ceilings, pegs, Taylor rule and yield curve

Programme Area(s): Monetary Economics and Fluctuations

Abstract: Central banks have sometimes turned their attention to long-term interest rates as a target or as a diagnosis of policy. This paper describes two historical episodes when this happened-the US in 1942-51 and the UK in the 1960s-and uses a model of inflation dynamics to evaluate monetary policies that rely on going long. It concludes that these policies for the most part fail to keep inflation under control. A complementary methodological contribution is to re-state the classic problem of monetary policy through interest-rate rules in a continuous-time setting where shocks follow diffusions in order to integrate the endogenous determination of inflation and the term structure of interest rates.

For full details and related downloads, please visit:

Bibliographic Reference

Reis, R. 2018. 'Central Banks Going Long'. London, Centre for Economic Policy Research.