This paper explores how sensitive is monetary policy to the precise preferences of the central bank (or of those that set its objectives) over inflation and economic activity. It does so in order to address a puzzle – which is that the US Fed and the Bank of England appear to have quite different objectives and yet have adopted strikingly similar policies in recent years. I use a calibrated model to assess how policy might be sensitive to attaching different weights to output and the output gap in central bank objectives. I find that a wide range of weights can give rise to rather similar monetary policies.
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