A Simple Empirical Measure of Central Banks' Conservatism

40 Pages Posted: 30 Apr 2012 Last revised: 26 Feb 2013

See all articles by Grégory Levieuge

Grégory Levieuge

Banque de France; University of Orleans - Laboratoire d'économie d'Orléans

Yannick Lucotte

PSB Paris School of Business

Date Written: April 28, 2012

Abstract

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

Levieuge, Grégory and Lucotte, Yannick, A Simple Empirical Measure of Central Banks' Conservatism (April 28, 2012). Available at SSRN: https://ssrn.com/abstract=2047420 or http://dx.doi.org/10.2139/ssrn.2047420

Grégory Levieuge (Contact Author)

Banque de France ( email )

Paris
France

University of Orleans - Laboratoire d'économie d'Orléans ( email )

Rue de Blois
Centre
France

Yannick Lucotte

PSB Paris School of Business ( email )

59 rue Nationale
Paris, 75013
France

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