-Monetary policy operates in a different environment than it did a decade ago. Financial market innovations have eroded the distinctions among monetary assets, making the definition of money increasingly arbitrary. Deregulation of interest rates and banking activity is changing the behavior of the monetary aggregates, as banks pay interest on monetary assets and nonbanks offer monetary-like ass...

This study captures regime-switching, monetary policy responses to financial market disturbances in Canada. Monetary policy is identified within a nonlinear, structural VAR framework with a regime-switching policy block that allows for contemporaneous policy reactions in a small open economy. The key finding is that monetary policy in Canada has undergone important changes in monetary policy re...

This paper assesses the prospects for the new Polish monetary policy strategy of inflation targeting. Regarding the general requirements for implementing an inflation targeting strategy it appears that Poland has made sufficient progress in reducing fiscal dominance and hardening budget constraints. The paper also finds that the exchange rate has played a dominant role as a policy instrument, w...

This paper examines what we have learned about monetary policy strategy and considers how we should change our thinking in this regard in the aftermath of the 2007-09 financial crisis. It starts with a discussion of where the science of monetary policy stood before the crisis and how central banks viewed monetary policy strategy. It then examines how the crisis has changed the thinking of both ...

This paper provides an overview of economic developments and the conduct of monetary policy in interwar Japan, while considering the relationships of these fluctuations and policies to changes in the monetary regime. To this end, monetary policies under the respective monetary regimes are discussed by using the Taylor Rule, which has recently been widely applied to evaluations of monetary polic...

We use two different nonparametric methods to determine whether there were multiple regimes in U.S. monetary policy over the period 1955—2003. We model monetary policy using two different versions of Taylor’s rule for the nominal interest rate target. By contrast with parametric tests for regime changes, the nonparametric methods we use allow the data to determine the dimensions on which to spl...

Yes. To the extent that monetary policy is assumed to react to asset prices, this reaction is usually assumed to be linear. This paper o¤ers a new perspective. I augment the model of Rigobon and Sack (2003) to allow for asymmetric reactions to stock price changes. I then demonstrate that the Federal Reserve has been following an asymmetric monetary policy rule over the period 19982008. While a ...

a r t i c l e i n f o JEL classification: E31 E44 E52 Keywords: Monetary policy rule Nonlinear model Stock market Structural break Time-varying coefficient This paper introduces nonlinearity and a structural break to the US forward-looking Taylor rule with a stock price gap, thereby alleviating the robustness problem that the linear Taylor rule is sensitive to minor changes of the sample period...