Affordable Access

Nonlinear monetary policy rules: some new evidence for the US.

  • Economics


This paper dreives optimal monetary policy rules in setups where certainty equivalence does not hold because either central bank preferences are not quadratic, and/or the aggregate supply relation is nonlinear. Analytical results show that these features lead to sign and size aymmetries, and nonlinearities in the policy rule. Reduced-form estimates indicate that US monetary policy can be characterized by a nonlinear policy rule after 1983, but not before 1979. This finding is consistent with the view that the Fed`s inflation preferences during the Volcker-Greenspan regime differ considerably from the ones during the Burns-Miller regime.

There are no comments yet on this publication. Be the first to share your thoughts.