A Simple Empirical Measure of Central Banks' Conservatism
40 Pages Posted: 30 Apr 2012 Last revised: 26 Feb 2013
Date Written: April 28, 2012
In this paper we suggest a simple empirical and model-independent measure of Central Banks' Conservatism, based on the Taylor curve. This new indicator can easily be extended in time and space, whatever the underlying monetary regime of the considered countries. We demonstrate that it evolves in accordance with the monetary experiences of 32 OECD member countries from 1980, and is largely equivalent to the model-based measure provided by Krause & Méndez [Southern Economic Journal, 2005]. We finally bring forward the interest of such an indicator for further empirical analysis dealing with the preferences of Central Banks.
Keywords: Central Banks' preferences, conservatism, Taylor curve, Taylor rule
JEL Classification: E43, E47, E52, E58
Suggested Citation: Suggested Citation