The nonlinear Phillips curve and inflation forecast targetting: symmetric versus asymmetric monetary policy rules

Eric Schaling ()

No 136, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: We extend the Svensson (1997a) inflation forecast targeting framework with a convex Phillips curve. We derive an asymmetric target rule, that implies a higher level of nominal interest rates than the Svensson (1997a) forward looking version of the reaction function popularised by Taylor (1993). Extending the analysis with uncertainty about the output gap, we find that uncertainty induces a further upward bias in nominal interest rates. Thus, the implications of uncertainty for optimal policy are the opposite of standard multiplier uncertainty analysis.

JEL-codes: E31 E42 E52 E58 (search for similar items in EconPapers)
Date: 1998
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Related works:
Journal Article: The Nonlinear Phillips Curve and Inflation Forecast Targeting: Symmetric versus Asymmetric Monetary Policy Rules (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:dgr:kubcen:1998136

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