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- Title
JAPAN: THE CASE FOR A TAYLOR RULE? A SIMPLE APPROACH.
- Authors
Depalo, Domenico
- Abstract
In this article I propose two different models for analyzing the conduct of monetary policy, facing certain expectations. The first is a autoregressive model, which implicitly accounts for adaptive expectations, while the second accounts for the rational expectations. I used these models to judge whether or not the Taylor rule can be a good benchmark for the conduct of monetary policy in Japan. The conclusion is that a simple AR model fits the data better than the Taylor rule, and that assuming rational expectations in Japan could be highly misleading, at least since the mid-1990s.
- Subjects
JAPAN; MONETARY policy; ECONOMIC policy; ECONOMIC forecasting; MONETARY theory
- Publication
Pacific Economic Review, 2006, Vol 11, Issue 4, p327
- ISSN
1361-374X
- Publication type
Article
- DOI
10.1111/j.1468-0106.2006.00333.x