Inflation Targeting Under Asymmetric Preferences

No 106, Working Papers from Banco de España

Abstract: This paper develops and estimates a game-theoretical model of inflation targeting where the central banker's preferences are asymmetric around the targeted rate. In particular, positive deviations from the target can be weighted more, or less, severely than negative ones in the central banker's loss function. It is shown that some of the previous results derived under the assumption of symmetry are not robust to the generalization of preferences. Estimates of the central banker's preference parameters for Canada, Sweden, and the United Kingdom are statistically different from the ones implied by the commonly used quadratic loss function.

Keywords: inflation; central banks; games (search for similar items in EconPapers)
JEL-codes: E31 E5 E58 G2 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2001
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Citations: View citations in EconPapers (12)

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http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/01/Fic/dt0106e.pdf First version, 2001 (application/pdf)

Related works:
Journal Article: Inflation Targeting under Asymmetric Preferences (2003)
Working Paper: Inflation Targeting Under Asymmetric Preferences (2001)
Working Paper: Inflation Targeting Under Asymmetric Preferences (2001)
Working Paper: Inflation Targeting Under Asymmetric Preferences (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0106

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