@techreport{c15cd6e126824c3ea0003afe933af122,
title = "Financial Stability and Monetary Policy",
abstract = "We argue that although UK monetary policy can be described using a Taylor rule in 1992- 2007, this rule fails during the recent financial crisis. We interpret this as reflecting a change in policymakers{\textquoteright} preferences to give priority to stabilising the financial system. Developing a model of optimal monetary policy with preference shifts, we show this provides a superior empirical model over crisis and pre-crisis periods. We find no response of interest rates to inflation during the financial crisis, possibly implying that the UK abandoned inflation targeting during the financial crisis.",
keywords = "monetary policy, financial crisis",
author = "Christopher Martin and Costas Milas",
year = "2010",
month = may,
language = "English",
series = "Bath Economics Research Working Papers",
publisher = "Department of Economics, University of Bath",
number = "5/10",
type = "WorkingPaper",
institution = "Department of Economics, University of Bath",
}