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- W55934489 abstract "Optimal monetary policy is predicated on forward-looking actions based on real-time forecasts for future variables, as reected in central bank (CB) policy statements. However, monetary policy could also be based on past data, due to forecast uncertainty, high predictive power of past information for the future, or policy inconsistency with CB statements. Do deeds follow words in the real world? This paper tests for the role of real-time information on both past data and forecasts about future variables in setting monetary policy rates in the world. It contributes to the literature on the conduct of monetary policy in ve novel dimensions. First, by specifying a generalized Taylor equation that nests backward-looking and forward-looking variables in setting interest rates. Second, by using real-time data available to CBs at the time they take their policy decisions. Third, by estimating the model on a world panel of monthly data extending from 1994 through 2011 and comprising 28 advanced and emerging economies. Fourth, using a large battery of appropriate panel-data estimators to test for robustness of reported results. Fifth, by testing for dierences in the conduct of monetary policy over time and across country groups. The empirical ndings are very supportive to the nested model for the reaction of monetary policy makers to real-time information on past realizations and forecasts of both ination and activity variables. The weight attached to ination forecasts is nearly ten times as large as" @default.
- W55934489 created "2016-06-24" @default.
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- W55934489 date "2012-01-01" @default.
- W55934489 modified "2023-09-24" @default.
- W55934489 title "Monetary Policy Decisions by the World's Central Banks using Real-Time Data" @default.
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