Measuring the Time-Inconsistency of US Monetary Policy

Content Provider	Semantic Scholar
Author	Surico, Paolo
Copyright Year	2003
Abstract	This paper o¤ers an alternative explanation for the rise and fall of postwar US in‡ation by measuring a novel source of monetary policy time-inconsistency due to Cukierman. In the presence of asymmetric preferences, the monetary authorities end up generating a systematic in‡ation bias through the private sector expectations of a larger policy response in recessions than in booms. Reduced-form estimates of US monetary policy rules indicate that while the in‡ation target declines from 3:42% to 1:96%, the in‡ation bias drops from 1:01% to a value not statistically di¤erent from zero moving from the preto the post-Volcker regime. This result can be rationalized in terms of the preference on output stabilization, which is found to be asymmetric in the former but not in the latter period. JEL Classi...cation: E52, E58
File Format	PDF HTM / HTML
Alternate Webpage(s)	http://www.federalreserve.gov/events/conferences/irfmp2003/pdf/Suricob.pdf
Alternate Webpage(s)	http://econwpa.wustl.edu:8089/eps/mac/papers/0401/0401006.pdf
Language	English
Access Restriction	Open
Subject Keyword	Arabic numeral 0 Cations Estimated Homophobia Large Money Rule (guideline)
Content Type	Text
Resource Type	Article