Estimated rules for monetary policy
AbstractEstimated policy rules describe how monetary policy has responded in the past to key economic indicators. Such rules can be used to evaluate past decisions and help guide the appropriate path for current policy. ; However, there may be unique features of a given economic situation—such as the current binding zero lower bound on interest rates and the desire to manage downside risk to economic activity—that warrant flexibility in following any rule based on past performance. ; Kahn estimates what rules best describe past monetary policies that coincided with periods of favorable economic performance. A rule placing somewhat greater weight on inflation than on output in determining a setting for the federal funds rate describes policy well over these periods and could be a useful guide in the future.
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Bibliographic InfoArticle provided by Federal Reserve Bank of Kansas City in its journal Economic Review.
Volume (Year): (2012)
Issue (Month): Q IV ()
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- Pier Francesco Asso & George A. Kahn & Robert Leeson, 2007. "The Taylor rule and the transformation of monetary policy," Research Working Paper RWP 07-11, Federal Reserve Bank of Kansas City.
- George A. Kahn, 2010. "Taylor rule deviations and financial imbalances," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 63-99.
- Evan F. Koenig, 2004.
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Federal Reserve Bank of Dallas, pages 1-16.
- Fabio Canova, 2004.
"What explains the Great Moderation in the US? A structural analysis,"
Economics Working Papers
919, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2007.
- Fabio Canova, 2009. "What Explains The Great Moderation in the U.S.? A Structural Analysis," Journal of the European Economic Association, MIT Press, vol. 7(4), pages 697-721, 06.
- Roberto M. Billi & George A. Kahn, 2008. "What is the optimal inflation rate?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 5-28.
- Laurence Ball, 1997.
"Efficient rules for monetary policy,"
Reserve Bank of New Zealand Discussion Paper Series
G97/3, Reserve Bank of New Zealand.
- Nikolay Markov & Thomas Nitschka, 2013. "Estimating Taylor Rules for Switzerland: Evidence from 2000 to 2012," Working Papers 2013-08, Swiss National Bank.
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