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Asymmetric Preferences for Monetary Policy Rules in the Visegrad Four and the Financial Crisis

Author

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  • Taro Ikeda

    (Graduate School of Economics Kobe University, 2-1 Rokko-dai, Nada, Kobe, 657-8501, Japan)

Abstract

This paper analyses asymmetric preferences for the monetary policies of the Visegrad Four (the Czech Republic, Hungary, Poland, and Slovakia). We extend Surico's (2007) asymmetric preference model to a small open economy in order to consider the exchange rate for a monetary policy framework as suggested by several earlier studies on the Visegrad Four. The results suggest that two asymmetries are evident in all the countries: an aversion to interest rates above the reference value and a preference for nominal exchange rate depreciation relative to the euro area. Moreover, the Czech policy does not exhibit any change in preferences during the recent financial crisis, while Poland responds aggressively.

Suggested Citation

  • Taro Ikeda, 2010. "Asymmetric Preferences for Monetary Policy Rules in the Visegrad Four and the Financial Crisis," Economics Bulletin, AccessEcon, vol. 30(3), pages 2160-2188.
    • Handle: RePEc:ebl:ecbull:eb-10-00414
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    References listed on IDEAS

    as
    1. Ramon Maria-Dolores, 2005. "Monetary Policy Rules In Accession Countries to EU: Is the Taylor rule a pattern?," Economics Bulletin, AccessEcon, vol. 5(7), pages 1-16.
    2. Ruge-Murcia, Francisco J., 2003. "Does the Barro-Gordon model explain the behavior of US inflation? A reexamination of the empirical evidence," Journal of Monetary Economics, Elsevier, vol. 50(6), pages 1375-1390, September.
    3. repec:ebl:ecbull:v:5:y:2007:i:3:p:1-11 is not listed on IDEAS
    4. Frömmel, Michael & Garabedian, Garo & Schobert, Franziska, 2011. "Monetary policy rules in Central and Eastern European Countries: Does the exchange rate matter?," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 807-818.
    5. repec:ebl:ecbull:v:5:y:2005:i:7:p:1-16 is not listed on IDEAS
    6. Juan Paez-Farrell, 2007. "Understanding monetary policy in Central European countries using Taylor-type rules: the case of the Visegrad four," Economics Bulletin, AccessEcon, vol. 5(3), pages 1-11.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Vašíček, Bořek, 2012. "Is monetary policy in the new EU member states asymmetric?," Economic Systems, Elsevier, vol. 36(2), pages 235-263.
    2. repec:udc:esteco:v:44:y:2017:i:2:p:97-124 is not listed on IDEAS
    3. Esther Barros-Campello & Carlos Pateiro-Rodríguez & J. Venancio Salcines-Cristal & Carlos Pateiro-López, 2017. "El esquema de objetivos de inflación: Evidencia para América Latina (1999-2015)," Estudios de Economia, University of Chile, Department of Economics, vol. 44(2 Year 20), pages 223-250, December.
    4. Jiang, Chun & Jian, Na & Liu, Tie-Ying & Su, Chi-Wei, 2016. "Purchasing power parity and real exchange rate in Central Eastern European countries," International Review of Economics & Finance, Elsevier, vol. 44(C), pages 349-358.

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    More about this item

    Keywords

    Asymmetric objective; monetary policy rule;

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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