Monetary policy rules, policy preferences, and uncertainty: recent empirical evidence

Muscatelli, A. and Trecroci, C. (2000) Monetary policy rules, policy preferences, and uncertainty: recent empirical evidence. Journal of Economic Surveys, 14(5), pp. 597-627. (doi: 10.1111/1467-6419.00126)

Full text not currently available from Enlighten.


We survey recent empirical evidence on monetary policy rules, and find that the emphasis in the political economy literature on institutional design (e.g. central bank independence and inflation targeting) is exaggerated. Formal institutional reform seems neither a necessary nor a sufficient condition for the observation of shifts in monetary policy rules. However, there is no doubt that in some cases (e.g. the UK following the start of inflation targeting in 1992, and Bank of England Independence in 1997), a major shift in monetary policy conduct is detectable. We also highlight the problems in explicitly testing the predictions of the political economy literature. Semi-structural modelling approaches, such as time-varying VAR models may be more useful in understanding policy rules, and the interaction between policy shifts and changes in the transmission mechanism.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Muscatelli, Professor Anton and Trecroci, Mr Carmine
Authors: Muscatelli, A., and Trecroci, C.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Journal of Economic Surveys
Publisher:John Wiley & Sons Ltd
ISSN (Online):1467-6419

University Staff: Request a correction | Enlighten Editors: Update this record