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Asymmetric monetary policy in Australia

Please use this identifier to cite or link to this item: http://hdl.handle.net/1959.14/151008

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Title: Asymmetric monetary policy in Australia
Related: Australian Conference of Economists (34th : 2005) (26 - 28 September 2005 : Melbourne)
Related: Borland, Jeff. Proceedings of the Australian Conference of Economists, 2005
Related: https://editorialexpress.com/conference/ACE2005/program/ACE2005.html
Publisher: Economic Society of Australia
Date: 2005
FoR/RFCD Code(s): 140200 Applied Economics
Author/Creator: Leu, Shawn Chen-Yu
Author/Creator: Sheen, Jeffrey
Description: We find evidence for asymmetric behaviour in the monetary policy of the Reserve Bank of Australia. From 1984 to 1990, it acted with considerable discretion leading to a relatively poor performance of an interest rate rule. However it behaved asymmetrically with regard to inflation and the output gap in downturns and upturns. On embracing inflation targeting from 1991, it enhanced its credibility by anchoring inflation expectations. Not only did its actions become more predictable from 1991 to 2002, it responded asymmetrically only to the output gap, switching to respond more acutely in downturns. While its asymmetric behaviour could result from asymmetric preferences or a non-linear aggregate supply relation, our results support the former explanation.
Description: 32 page(s)
Subject Keyword: 140200 Applied Economics
Subject Keyword: interest rate rules
Subject Keyword: asymmetric preferences
Subject Keyword: non-linear Phillips curve
Subject Keyword: generalized method of moments
Subject Keyword: inflation targeting
Subject Keyword: credibility
Resource Type: conference paper
Organisation: Macquarie University. Dept. of Economics

Identifier: http://hdl.handle.net/1959.14/151008
Identifier: ISBN:0734026080
Identifier: mq-rm-2009000093
Language: eng
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