The non-linear Phillips curve and inflation forecast targeting

Eric Schaling ()

Bank of England working papers from Bank of England

Abstract: This paper extends the Svensson inflation forecast targeting framework with a convex Phillips curve. An asymmetric target rule is derived, which implies a higher level of nominal interest rates than the Svensson forward-looking version of the reaction function popularised by Taylor. Extending the analysis with uncertainty about the output gap, it is found that uncertainty induces a further upward bias in nominal interest rates.

Date: 1999-07
New Economics Papers: this item is included in nep-mon
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Citations: View citations in EconPapers (43)

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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:98

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