Optimal monetary policy with asymmetric preferences for output
We extend Ruge-Murcia, 2003, Ruge-Murcia, 2004 to weigh inflation and output and show that empirical evidence supports an asymmetric preference hypothesis for output. We also find evidence that the monetary authority targets potential output in parallel to Barro and Gordon (1983).
optimal monetary policy, asymmetric preferences, conditional output volatility
Cassou, Steven P., C. Patrick Scott, and Jesús Vázquez. "Optimal monetary policy with asymmetric preferences for output." Economics Letters 117, no. 3 (2012): 654-656.