You are not currently logged in.
Access JSTOR through your library or other institution:
If You Use a Screen ReaderThis content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
A Prudent Central Banker
Francisco J. Ruge-Murciá
IMF Staff Papers
Vol. 49, No. 3 (2002), pp. 456-469
Stable URL: http://www.jstor.org/stable/3872505
Page Count: 14
You can always find the topics here!Topics: Economic inflation, Central banking, Unemployment, Monetary policy, Prudence, Central banks, Statistical discrepancies, International economics, Econometrics, Economic modeling
Were these topics helpful?See something inaccurate? Let us know!
Select the topics that are inaccurate.
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Preview not available
This paper studies the role of prudence in modern central banking. To that end, it relaxes the usual assumption of quadratic preferences and adopts instead an asymmetric preference specification whereby positive deviations from a target can be weighted more, or less, severely than negative deviations. It is shown that prudence with respect to inflation (unemployment) reduces (increases) equilibrium inflation. The overall effect depends on the relative magnitude of the preference parameters and the conditional variances of inflation and unemployment. The implications of the model are examined using cross-section data from OECD countries.
IMF Staff Papers © 2002 International Monetary Fund