Investigating the monetary policy of central banks with assessment indicators

Marcel Bluhm

European Journal of Political Economy, 2015, vol. 38, issue C, 181-196

Abstract: This paper proposes a new approach to use qualitative information for investigating central banks' monetary policy strategy. Quantitative assessment indicators which are generated from a central bank's public statement with the balance statistic method are used to estimate Taylor-type rules. This procedure allows to directly capture a policymaker's assessment of macroeconomic variables which are relevant for the decision making process. As an application of the proposed method, a novel real time data set consisting of assessment indicators for the Bundesbank is generated to re-investigate its monetary policy. The analysis provides evidence that (i) the Bundesbank was a flexible monetary targeter and (ii) that the proposed indicator variables contain information beyond that of standard macroeconomic variables used in monetary policy analysis.

Keywords: Assessment indicators; Monetary policy rule; Real time data; Survey analysis (search for similar items in EconPapers)
JEL-codes: C42 E52 E58 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:38:y:2015:i:c:p:181-196

DOI: 10.1016/j.ejpoleco.2015.03.001

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