Nonlinear Monetary Policy Rules: Some New Evidence for the U.S

Juan Dolado, Ramón Maria-Dolores and Francisco Ruge-Murcia

Studies in Nonlinear Dynamics & Econometrics, 2004, vol. 8, issue 3, 34

Abstract: This paper derives optimal monetary policy rules in setups where certainty equivalence does not hold because either central bank preferences are not quadratic, and/or the aggregate supply relation is nonlinear. Analytical results show that these features lead to sign and size asymmetries, and nonlinearities in the policy rule. Reduced-form estimates indicate that US monetary policy can be characterized by a nonlinear policy rule after 1983, but not before 1979. This finding is consistent with the view that the Fed's inflation preferences during the Volcker-Greenspan regime differ considerably from the ones during the Burns-Miller regime.

Date: 2004
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Working Paper: Nonlinear Monetary Policy Rules: Some New Evidence for the U.S (2003)
Working Paper: Nonlinear Monetary Policy Rules: Some New Evidence for the U.S (2003)
Working Paper: Non-Linear Monetary Policy Rules: Some New Evidence for the US (2002)
Working Paper: Nonlinear monetary policy rules: some new evidence for the US (2002)
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DOI: 10.2202/1558-3708.1155

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