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Refereed Articles

Output Sensitivity of Monetary Policy and Macroeconomic Performance

Michael Berlemann, Kai Hielscher (2012),
Applied Economics Letters 19(15), 1505-1509.

Employing dynamic panel estimation techniques we derive an empirical measure of central banks’ degree of output sensitivity. When relating this measure to macroeconomic outcome variables, we find that a decrease in output sensitivity results in larger business-cycle movements and higher medium-term inflation uncertainty. However, the level of inflation is decreased and the output gap is increased.

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Kai Hielscher