MONETARY POLICY REGIME SWITCHES AND MACROECONOMIC DYNAMICS
This article considers the determinacy and distributional consequences of regime switching in monetary policy. Although switching in the inflation target does not affect determinacy, switches in the inflation response can cause indeterminacy. Satisfying the Taylor principle period by period is neith...
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| Veröffentlicht in: | International economic review (Philadelphia) 2016-02, Vol.57 (1), p.211-230 |
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| container_title | International economic review (Philadelphia) |
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| creator | Foerster, Andrew T. |
| description | This article considers the determinacy and distributional consequences of regime switching in monetary policy. Although switching in the inflation target does not affect determinacy, switches in the inflation response can cause indeterminacy. Satisfying the Taylor principle period by period is neither necessary nor sufficient for determinacy when inflation responses switch; indeterminacy can arise if monetary policy responds too aggressively to inflation in the active regime. Inflation target switches primarily impact the level of inflation, whereas inflation response switches primarily impact the volatility. Expecting an inflation target switch has minor effects on volatility, whereas expecting an inflation response switch raises volatility more substantially. |
| doi_str_mv | 10.1111/iere.12153 |
| format | Article |
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Although switching in the inflation target does not affect determinacy, switches in the inflation response can cause indeterminacy. Satisfying the Taylor principle period by period is neither necessary nor sufficient for determinacy when inflation responses switch; indeterminacy can arise if monetary policy responds too aggressively to inflation in the active regime. Inflation target switches primarily impact the level of inflation, whereas inflation response switches primarily impact the volatility. Expecting an inflation target switch has minor effects on volatility, whereas expecting an inflation response switch raises volatility more substantially.</description><identifier>ISSN: 0020-6598</identifier><identifier>EISSN: 1468-2354</identifier><identifier>DOI: 10.1111/iere.12153</identifier><language>eng</language><publisher>Philadelphia: Blackwell Publishing Ltd</publisher><subject>Determinacy ; Economic inflation ; Economic models ; Explosives ; Inflation ; Inflation rates ; Interest rates ; Macroeconomics ; Monetary policy ; Output gaps ; Steady state economies ; Studies ; Volatility</subject><ispartof>International economic review (Philadelphia), 2016-02, Vol.57 (1), p.211-230</ispartof><rights>2016 Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association</rights><rights>(2016) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association</rights><rights>Copyright Blackwell Publishing Ltd. 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Although switching in the inflation target does not affect determinacy, switches in the inflation response can cause indeterminacy. Satisfying the Taylor principle period by period is neither necessary nor sufficient for determinacy when inflation responses switch; indeterminacy can arise if monetary policy responds too aggressively to inflation in the active regime. Inflation target switches primarily impact the level of inflation, whereas inflation response switches primarily impact the volatility. Expecting an inflation target switch has minor effects on volatility, whereas expecting an inflation response switch raises volatility more substantially.</description><subject>Determinacy</subject><subject>Economic inflation</subject><subject>Economic models</subject><subject>Explosives</subject><subject>Inflation</subject><subject>Inflation rates</subject><subject>Interest rates</subject><subject>Macroeconomics</subject><subject>Monetary policy</subject><subject>Output gaps</subject><subject>Steady state economies</subject><subject>Studies</subject><subject>Volatility</subject><issn>0020-6598</issn><issn>1468-2354</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2016</creationdate><recordtype>article</recordtype><recordid>eNp9kEtLw0AURgdRsD427oWAGxFS55WZxF1IYw00ibYV6WrITCeQ2po606L-e0ejXbjwbu7iO-dy-QA4Q7CP3Fw32ug-wigge6CHKAt9TAK6D3oQYuizIAoPwZG1CwghI5T3wE1eFuk0Hs-8-3KUJTNvnA6zPPUmT9k0uUsnXlwMvDxOxmWalEWZZ4k3mBWx25MTcFBXS6tPf_YxeLxNneSPymGWxCNf0SAkfh2hOdMcU15LqXBQhxJWEiOMsWRUsjlBsubzGnNCkdLzCKOqUkpTJImSlSLH4LK7uzbt61bbjVg1VunlsnrR7dYKxEOIKGaIO_TiD7pot-bFfecoxhmDEQ0dddVRyrTWGl2LtWlWlfkQCIqvGsVXjeK7RgejDn5rlvrjH1Jk6Tj9dc47Z2E3rdk5lEIeEEpd7nd5Yzf6fZdX5lkwTnggnoqhIJOcRpQ8CEg-ARyhhu4</recordid><startdate>201602</startdate><enddate>201602</enddate><creator>Foerster, Andrew T.</creator><general>Blackwell Publishing Ltd</general><general>Wiley Periodicals, Inc</general><scope>BSCLL</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>201602</creationdate><title>MONETARY POLICY REGIME SWITCHES AND MACROECONOMIC DYNAMICS</title><author>Foerster, Andrew T.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c4583-f91d6e7247fbbc25f8b0ab21222b64b6d31bf7df27341ced921aacce41b3cbac3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2016</creationdate><topic>Determinacy</topic><topic>Economic inflation</topic><topic>Economic models</topic><topic>Explosives</topic><topic>Inflation</topic><topic>Inflation rates</topic><topic>Interest rates</topic><topic>Macroeconomics</topic><topic>Monetary policy</topic><topic>Output gaps</topic><topic>Steady state economies</topic><topic>Studies</topic><topic>Volatility</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Foerster, Andrew T.</creatorcontrib><collection>Istex</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>International economic review (Philadelphia)</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Foerster, Andrew T.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>MONETARY POLICY REGIME SWITCHES AND MACROECONOMIC DYNAMICS</atitle><jtitle>International economic review (Philadelphia)</jtitle><addtitle>International Economic Review</addtitle><date>2016-02</date><risdate>2016</risdate><volume>57</volume><issue>1</issue><spage>211</spage><epage>230</epage><pages>211-230</pages><issn>0020-6598</issn><eissn>1468-2354</eissn><abstract>This article considers the determinacy and distributional consequences of regime switching in monetary policy. 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| ispartof | International economic review (Philadelphia), 2016-02, Vol.57 (1), p.211-230 |
| issn | 0020-6598 1468-2354 |
| language | eng |
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| source | EBSCOhost Business Source Complete; Access via Wiley Online Library; JSTOR Archive Collection A-Z Listing |
| subjects | Determinacy Economic inflation Economic models Explosives Inflation Inflation rates Interest rates Macroeconomics Monetary policy Output gaps Steady state economies Studies Volatility |
| title | MONETARY POLICY REGIME SWITCHES AND MACROECONOMIC DYNAMICS |
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