Asymmetric preferences in real-time learning and the Taylor rule

Taro Ikeda

Economics Letters, 2014, vol. 124, issue 3, 487-489

Abstract: Branch (2014) shows that the asymmetric preference of professional forecasters enhances the fit of the original Taylor rule with respect to recent US monetary policy. This paper investigates the stability of the Taylor rule with asymmetric preference under adaptive learning. We find that when policy omits asymmetry and learning volatility, a more vigorous response to inflation than the pure Taylor principle is required.

Keywords: Asymmetric preference; Adaptive learning; Taylor rule (search for similar items in EconPapers)
JEL-codes: E50 E52 E58 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:124:y:2014:i:3:p:487-489

DOI: 10.1016/j.econlet.2014.07.017

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