Title

Optimal monetary policy with asymmetric preferences for output

Abstract

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).

Document Type

Article

DOI

https://doi.org/10.1016/j.econlet.2012.08.009

Keywords

optimal monetary policy, asymmetric preferences, conditional output volatility

Publication Date

2012

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