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Symmetric or asymmetric? Monetary policy and Polish economy reactions over the business cycle

Jan Przystupa ()
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Jan Przystupa: Narodowy Bank Polski

Bank i Kredyt, 2019, vol. 50, issue 4, 375-410

Abstract: In the paper, we examine whether monetary policy and reactions of the economy to monetary policy are symmetric over the business cycle. Not only do we study the differences between prosperity and slump, but also between all the phases of the business cycle, i.e. recovery, expansion, recession and depression. Moreover, we analyse reactions in all points of the business cycle. We find asymmetry in the reactions of monetary policy for the output gap close to zero, but the result disappears in a shorter sample. The effects of monetary policy are symmetric for the output gap between -2.0% and 1.5%. The asymmetry appears with the output gap getting closer to its extreme values. This result is robust across various samples.

Keywords: monetary policy; business cycle; semi-structural model; non-linearity (search for similar items in EconPapers)
JEL-codes: C11 C32 C61 E12 E32 E52 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:nbp:nbpbik:v:50:y:2019:i:4:p:375-410