On Measuring the Efficiency of Monetary Policy

Walter Briec, Emmanuelle Gabillon (), Laurence Lasselle and Hermann Ratsimbanierana

No 1101, CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: Cecchetti et al. (2006) develop a method for allocating macroeconomic performance changes among the structure of the economy, variability of supply shocks and monetary policy. We propose a dual approach of their method by borrowing well-known tools from production theory, namely the Farrell measure and the Malmquist index. Following Färe et al (1994) we propose a decomposition of the efficiency of monetary policy. It is shown that the global efficiency changes can be rewritten as the product of the changes in macroeconomic performance, minimum quadratic loss, and efficiency frontier.

Keywords: efficiency frontier; inflation variability; Farrell measure; Malmquist index. (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2011-01
New Economics Papers: this item is included in nep-cba, nep-eff, nep-mac and nep-mon
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Related works:
Journal Article: On measuring the efficiency of monetary policy (2012)
Working Paper: On measuring the efficiency of monetary policy (2012)
Working Paper: On Measuring the Efficiency of Monetary Policy (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:1101

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