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Asymmetric Preferences and the Stability Problem for Optimal Monetary Policy Rules

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  • TARO IKEDA

Abstract

This paper evaluates the stability properties of optimal monetary policy rules when professionals under adaptive learning have asymmetric preferences. The asymmetric preferences require volatility estimates in real time. An expectations‐based rule can stabilize the economy, while a fundamentals‐based rule leads to instability.

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  • Taro Ikeda, 2017. "Asymmetric Preferences and the Stability Problem for Optimal Monetary Policy Rules," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(8), pages 1831-1838, December.
    • Handle: RePEc:wly:jmoncb:v:49:y:2017:i:8:p:1831-1838
    DOI: 10.1111/jmcb.12451
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