Working Papers in Economics
Identifying central bank’s preferences: the case of Poland
Abstract: We seek to test the hypothesis that the weight on output
gap variability in the central bank’s loss function is equal to zero in
Poland. To that end we derive monetary policy reaction function from the
central bank’s optimization problem. We find that the weights assigned to
target variables were not constant over the period 1995-2003. The weight
attached to inflation stabilization objective in the central bank’s loss
function in Poland was equal to the weight assigned to output gap
stabilization in the period 1995-1999 and the latter goal has been
disregarded since 2000.
Keywords: Monetary policy reaction function; central bank’s loss function; New Keynesian Phillips curve; (follow links to similar papers)
JEL-Codes: E52; E58; P24; (follow links to similar papers)
17 pages, August 9, 2004
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