Asymmetric Monetary Policy in Australia

Author(s)
Leu, Shawn
Sheen, Jeffrey
Publication Date
2006
Abstract
For countries that have floating exchange rates and free capital mobility, monetary policy has come to play an increasingly vital role in the stabilisation of the economy. Taylor(1993) proposes a simple monetary policy rule whereby the monetary authority adjusts the short-term interest rate the ubiquitous monetary policy instrument – to respond to observed inflation and output fluctuations in the economy. Clarida et al. (1998, 1999, 2000) extend the baseline Taylor rule to account for long and variable lags in monetary policy, where the monetary authority responds to expected future inflation movement. In both specifications, positive and negative inflation and output gaps are implicitly met with evenly weighted policy responses.
Citation
The Economic Record, 82(s1), p. S85--S96
ISSN
1475-4932
0013-0249
Link
Publisher
Wiley-Blackwell Publishing Asia
Title
Asymmetric Monetary Policy in Australia
Type of document
Journal Article
Entity Type
Publication

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