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Monetary Policy Rules with PID Control Features: Evidence from the UK, USA and EU

Shepherd, David, Muñoz Torres, Rebeca I., Saridakis, George (2019) Monetary Policy Rules with PID Control Features: Evidence from the UK, USA and EU. International Review of Applied Economics, 33 (6). pp. 737-755. ISSN 0269-2171. (doi:10.1080/02692171.2019.1585766) (KAR id:70564)

Abstract

This paper considers the extent to which the monetary policy operations of three major central banks can be regarded as an application of Proportional-Integral-Derivative (PID) control rules. The paper outlines the general PID framework and estimates a series of dynamic models to identify how interest rate policy adjustments are affected by the rate of inflation and the level of macroeconomic activity. The paper examines data for the UK, the USA and the Eurozone. The results suggest that the PID rules can provide a useful theoretical and empirical framework for estimating central bank responses to the inflation and macroeconomic activity variables by improving the explanatory power of the Taylor rule model and determining the effect of the parameters.

Item Type: Article
DOI/Identification number: 10.1080/02692171.2019.1585766
Uncontrolled keywords: Monetary Policy Rules; Taylor Rules; Feedback Control; PID Control Rules
Subjects: H Social Sciences
Divisions: Divisions > Kent Business School - Division > Department of Marketing, Entrepreneurship and International Business
Depositing User: George Saridakis
Date Deposited: 03 Dec 2018 09:31 UTC
Last Modified: 08 Dec 2022 23:41 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/70564 (The current URI for this page, for reference purposes)

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