Taylor rules in the open economy

Journal of Economic Dynamics and Control, 2003

Metroeconomica, 2002

2015

This paper is concerned with the relationship between the interest rate smoothing behavior of a central bank and the variability of inflation and output. The issue is analyzed through the lens of a small open economy dynamic stochastic general equilibrium model with nontraded goods price rigidities and habit persistence. The benchmark model is calibrated to match certain key business cycle features of a small open economy like Australia. Relative to the benchmark model, experiments on a Taylor rule with interest rate smoothing are conducted. Due to the existence of a short run expectational Phillips curve in the model, monetary policy will imply certain trade-offs between inflation and output variance, under sensible parameter values of the model. More importantly, in a world where there exists such a trade-off, greater interest rate smoothing in the Taylor rule can potentially yield lower sacrifices in terms of output variability in return for lower inflation, thus increasing polic...

International Research Journal of Economics and Finance, 2013

This paper investigates the non-linear behavior of the policy reaction function of the Central Bank of the Republic of Turkey (CBRT) during the Inflation Targeting (IT) period of 2002:M1-2012:M4 by employing Smooth Transition Auto Regression (STAR) models developed by Terasvirta (1998, 2004) which allow for the possible presence of non-linearities in data. Our data suggested using the quadratic logistic function which was employed by Martin and Milas (2004) because it fits better to reaction functions. Our results reveal that the CBRT tried to keep the expected inflation gap within a range when the expected inflation gap was used as a transition variable. The reaction of the CBRT was mild when the expected inflation gap was inside the range, otherwise it became drastic. These findings provide evidence suggesting that monetary policy behavior of the CBRT is best described by the non-linear forward-looking Taylor rule rather than being linear or backward-looking during the IT period.

Journal of Monetary Economics, 2003

2009

Weltwirtschaftliches Archiv, 1982

Academia Letters, 2021

Juliana Morcelli Oliveros, Un museo en la trastienda. Ciencia, comercio y naturaleza americana en la farmacia Salvador (Barcelona, 1669-1726), Prohistoria Ediciones, Rosario, 2024, 264 p. – Historia de la Ciencia, 12