The Nonlinear Phillips Curve and Inflation Forecast Targeting: Symmetric Versus Asymmetric Monetary Policy Rules
Year: 2004
Type: article
Abstract: We extend the Svensson (1997a) inflation forecast targeting framework with a convex Phillips curve.We derive an asymmetric target rule, that implies a higher level of nominal interest rates than the Svensson (1997a) forward looking version of the reaction function popularised by Taylor (1993).Extending the analysis with uncertainty about the output gap, we find that uncertainty induces a further upward bias in nominal interest rates.Thus, the implications of uncertainty for optimal policy are the opposite of standard multiplier uncertainty analysis.
Author: Eric Schaling
Institution: University of Johannesburg
Language: English
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2145274572