Skewed Forward-Looking Monetary Policy Behavior: A Look at the Latin American Inflation Targeting Practice

7 Pages Posted: 13 Apr 2010 Last revised: 12 Mar 2012

See all articles by Marco Vega

Marco Vega

Central Reserve Bank of Peru

Date Written: March 1, 2010

Abstract

Estimation of forward-looking interest rate rules is ubiquitous in the context of developed-economy central banks. In this paper, the five countries in Latin America that have adopted the Inflation Targeting framework are considered, and estimations of forward-looking policy rules are performed via i) standard least-squares criteria and ii) quantile regressions. The estimated standard mean effects indicate that Brazil, Chile, and Mexico are strongly forward-looking for horizons of a year and more. The estimated quantile effects suggest that policy makers in Brazil, Chile, and Mexico are likely to have faced more upside than downside risks to their one-year-ahead inflation forecasts when setting their policies.

Keywords: Quantile Regressions, Monetary Policy

Suggested Citation

Vega, Marco Antonio, Skewed Forward-Looking Monetary Policy Behavior: A Look at the Latin American Inflation Targeting Practice (March 1, 2010). Journal of CENTRUM Cathedra, Vol. 3, Issue 1, pp. 60-66, 2010, Available at SSRN: https://ssrn.com/abstract=1588206

Marco Antonio Vega (Contact Author)

Central Reserve Bank of Peru ( email )

Jirón Miroquesada 441
Lima, Lima Lima 1
Peru

HOME PAGE: http://www.bcrp.gob.pe/

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