Friedrich, Christian; Guérin, Pierre; Leiva-Léon, Danilo - 2020 - Last updated: June 5, 2020
, macroprudential policies, and the presence of a flexible exchange rate regime can increase monetary policy independence. … independence, which is defined as the response of central banks' policy interest rates to exogenous changes in inflation. We show … that central banks tighten their policy rates in response to an unanticipated increase in the inflation gap during times …