Targets, zones, and asymmetries: a flexible nonlinear model of recent UK monetary policy

Virginie Boinet and Christopher Martin

Oxford Economic Papers, 2008, vol. 60, issue 3, 423-439

Abstract: We estimate a flexible model of the behaviour of UK monetary policymakers in the era of inflation targeting based on a new representation of policymaker's preferences. This enables us to address a range of issues that are beyond the scope of the existing literature. We find a complex relationship between interest rates and inflation: interest rates are passive when inflation is close to the target but there is an increasingly vigorous response as inflation deviates further from the target. Copyright 2008 , Oxford University Press.

Date: 2008
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Working Paper: Targets, Zones and Asymmetries:A Flexible Nonlinear Model of Recent UK Monetary Policy (2005)
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