Discussion Paper Details

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Title: Asymmetries In Monetary Policy Rules: Evidence For Four Central Banks

Author(s): Juan J. Dolado, Ramón María-Dolores and Manuel Naveira Barrero

Publication Date: April 2000

Keyword(s): asymmetries, Ordered Probit Models and Taylor Rules

Programme Area(s): International Macroeconomics

Abstract: This paper investigates the possible existence of asymmetric effects in the response of four central banks to inflation and output gaps as regards the 'sign' and 'size' of those gaps. The evidence obtained both through the estimation of a generalized Taylor rule and an ordered probit model points out that most central banks show a stronger reaction to inflation upswings relative to downswings. However, except for the Federal Reserve, no asymmetric behaviour with respect to the output gap is found.

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Bibliographic Reference

Dolado, J, María-Dolores, R and Naveira Barrero, M. 2000. 'Asymmetries In Monetary Policy Rules: Evidence For Four Central Banks'. London, Centre for Economic Policy Research.