Asymmetric preferences and monetary policy deviations

Scott, Cathy

doi:10.1016/j.jmacro.2016.11.003

Cited by 4 publications

(1 citation statement)

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“…Decipherable from the above is probable asymmetry function of monetary policies. Thus, there have been growing efforts in the literature to understand the asymmetry effects of monetary policy on the target variables (see Weise, 1999;De Grauwe, 2000;Gros and Hefeker, 2002;Nolan, 2002;Aksoy et al, 2002;De Grauwe and Se´ne´gas, 2006;Ouyang and Wang, 2009;Ravn, 2013;Karras, 2013;Zakir and Malik, 2013;Santoro et al, 2014;Georgiadis, 2015;Lee and Yoon, 2016;Scot, 2016;Kilinc and Tunc, 2017;Zhu and Chen, 2017;Fang et al, 2018;Gogas et al, 2018). Despite the vastness of literature on the asymmetry effects of monetary policy, the empirical findings have been hugely mixed with little or no consensus on the extent to which asymmetries matter for the effectiveness of monetary policy.…”

Section: Introductionmentioning

confidence: 99%

Impact of Monetary Policy Shocks on Macroeconomic Fundamentals: The Role of Asymmetry and Uncertainty in Nigeria

Deekor¹

2019

ASSRJ

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That monetary policy is made in an environment of substantial uncertainty is only a commonplace knowledge. But for the peculiar vulnerability of monetary authorities to exogenous conditions in developing economies, we hypothesized for the role of uncertainty in the asymmetry effect of monetary policy. Essentially, we explore both money supply and interest rate process using linear and non-linear ARDL to show that political pressure such as variability in government borrowing has the potential to accelerate the asymmetry effect of monetary policy. We also observe the asymmetry effect of monetary policy to be sensitive to the choice of monetary policy indicator. These findings suggest that monetary authorities must consider not only the effectiveness or otherwise of monetary policy instruments to affect the target policy goals, but also the fact that not all the target variables react in a similar way to expansionary and contractionary monetary policy shocks.

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