Nowcasting Taylor rule and relative asymmetry

Taro Ikeda ()
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Taro Ikeda: Faculty of Economics Kurume University, Graduate School of Economics, Kobe University

No 1208, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: This paper analyses nowcasting of manetary policy in an uncertain data environment.Nowcasting induces a relative asymmetry-a ratio of asymmetric preference for output nowcasting to the one for inflation in real-time.We propose a nowcasting Taylor rule to eliminate biases in the asymmetric nowcasting. Notably,three results are obtained as follows.First, central bank is to become an inflation-fighter more as relative asymmetry increases.Second,compared to the standard Taylor rule, the nowcasting rule substantially improves social welfare.Third, empirical excises support the relative asymmetry in uncertain data periods of the euro area, Japan, and the United States.

Keywords: monetary policy rules; real-time data; nowcasting; asymmetric loss (search for similar items in EconPapers)
JEL-codes: E3 E52 E58 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2012-05
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Persistent link: https://EconPapers.repec.org/RePEc:koe:wpaper:1208

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