Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119611
Authors: 
Castelnuovo, Efrem
Surico, Paolo
Year of Publication: 
2002
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 2.2002
Abstract: 
The design of monetary policy depends upon the targeting strategy adopted by the central bank. This strategy describes a set of policy preferences, which are actually the structural parameters to analyse monetary policy making. Accordingly, we develop a novel calibration method to identify central bank's preferences from the estimates of an optimal Taylor-type rule. The empirical analysis on US data shows that output stabilization has not been an independent argument in the Fed's objective function during the Greenspan era. This suggests that the output gap has entered the policy rule only as leading indicator for future inflation, therefore being only instrumental (to stabilize inflation) rather than important per se.
Subjects: 
Central bank's preferences
calibration
inflation targeting
optimal monetary policy
JEL: 
C61
E52
E58
Document Type: 
Working Paper

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