Given conflicting results on whether the US monetary policy rule exhibited nonlinearity in the post-war period we employ a new Granger non-causality nonlinearity test and non-parametric procedures to re-examine the issue. Both procedures suggest that the Fed followed a nonlinear Taylor rule with...

Motivated by a central banker with a symmetric inflation zone target, we assume in this letter that the loss function of a policy maker can be approximated by the quartic form. For non-normal distributions, we show that such a loss function implies a systematic inflation bias even when the bank...