Monetary frameworks and institutional constraints: UK monetary policy reaction functions, 1985-2003

C Adam, D Cobham, E Girardin

    Research output: Contribution to journalArticlepeer-review

    22 Citations (Scopus)

    Abstract

    Monetary policy reaction functions are estimated for the UK over three periods - 1985-90, 1992-97 and 1997-2003 - in order to disentangle two effects: the switch from an emphasis on exchange rate stabilization to inflation targeting, and the introduction of instrument-independence in 1997. The external factors considered include US as well as German interest rates, and this leads to the identification of 'domestic' and 'international' models of the reaction function. The results suggest that it is the changes in the institutional arrangements rather than those in the targeting regime which have been decisive in the development of policy in this period.

    Original languageEnglish
    Pages (from-to)497-516
    Number of pages20
    JournalOxford Bulletin of Economics and Statistics
    Volume67
    Publication statusPublished - Aug 2005

    Keywords

    • GENERALIZED-METHOD
    • REAL-TIME
    • INFLATION
    • RULES
    • MOMENTS
    • MODELS

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