IDEAS home Printed from https://ideas.repec.org/a/fip/fedcec/y2012ioct12n2012-17.html
   My bibliography  Save this article

Gaps versus growth rates in the Taylor Rule

Author

Listed:
  • Charles T. Carlstrom
  • Timothy S. Fuerst

Abstract

There are many possible formulations of the Taylor rule. We consider two that use different measures of economic activity to which the Fed could react, the output gap and the growth rate of GDP, and investigate which captures past movements of the fed funds rate more closely. Looking at these rules through the lens of a partial-adjustment Taylor rule, we conclude that the gap rule does a better job of explaining the actual funds rate data, and provides a better rule-of-thumb for understanding historical monetary policy.

Suggested Citation

  • Charles T. Carlstrom & Timothy S. Fuerst, 2012. "Gaps versus growth rates in the Taylor Rule," Economic Commentary, Federal Reserve Bank of Cleveland, vol. 2012(17), pages 1-4, October.
    • Handle: RePEc:fip:fedcec:y:2012:i:oct12:n:2012-17
    DOI: 10.26509/frbc-ec-201217
    as

    Download full text from publisher

    File URL: https://doi.org/10.26509/frbc-ec-201217
    File Function: full text
    Download Restriction: no
    File URL: https://libkey.io/10.26509/frbc-ec-201217?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anthony Diercks, 2016. "The Equity Premium, Long-Run Risk, and Optimal Monetary Policy," 2016 Meeting Papers 207, Society for Economic Dynamics.
    2. Anthony M. Diercks, 2015. "The Equity Premium, Long-Run Risk, & Optimal Monetary Policy," Finance and Economics Discussion Series 2015-87, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedcec:y:2012:i:oct12:n:2012-17. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: 4D Library (email available below). General contact details of provider: https://edirc.repec.org/data/frbclus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.