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Estimates of the Effectiveness of Monetary Policy Author info | Abstract | Publisher info | Download info | Related research | Statistics Ray C. Fair () (Yale University )
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This paper examines various interest rate rules, as well as policies derived by solving optimal control problems, for their ability to dampen economic fluctuations caused by random shocks. A tax rate rule is also considered. A multicountry econometric model is used for the experiments. The results differ sharply from those obtained using recent models in which the coefficient on inflation in the nominal interest rate rule must be greater than one in order for the economy to be stable.
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Paper provided by Cowles Foundation, Yale University in its series Cowles Foundation Discussion Papers with number
1298.
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Length: 29 pages
Date of creation: Apr 2001Date of revision:
Jun 2003Publication status: Published in Journal of Money, Credit and Banking (August 2005), 645-660Handle: RePEc:cwl:cwldpp:1298Note: CFP 1155Contact details of provider: Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA Phone: (203) 432-3702 Fax: (203) 432-6167 Web page: http://cowles.econ.yale.edu/ More information through EDIRC
Order Information: Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
For technical questions regarding this item, or to correct its listing, contact: (Glena Ames).
Keywords: Monetary policy ; interest rate rules ; Other versions of this item:
Find related papers by JEL classification: E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Fair, Ray C. & Howrey, E. Philip, 1996.
"Evaluating alternative monetary policy rules ,"
Journal of Monetary Economics ,
Elsevier, vol. 38(2), pages 173-193, October.
[Downloadable!] (restricted)
Other versions: David Reifschneider & Robert Tetlow & John Williams, 1999.
"Aggregate disturbances, monetary policy, and the macroeconomy: the FRB/US perspective ,"
Federal Reserve Bulletin ,
Board of Governors of the Federal Reserve System (U.S.), issue Jan, pages 1-19.
[Downloadable!]
John B. Taylor, 2000.
"Teaching Modern Macroeconomics at the Principles Level ,"
American Economic Review ,
American Economic Association, vol. 90(2), pages 90-94, May.
[Downloadable!] (restricted)
Martin Feldstein & James H. Stock, 1993.
"The Use of Monetary Aggregate to Target Nominal GDP ,"
NBER Working Papers
4304, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions: Richard Clarida & Jordi Galí & Mark Gertler, 2000.
"Monetary Policy Rules And Macroeconomic Stability: Evidence And Some Theory ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 115(1), pages 147-180, February.
[Downloadable!] (restricted)
Other versions:
Clarida, Richard & Galí, Jordi & Gertler, Mark, 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
CEPR Discussion Papers
1908, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Richard Clarida & Jordi Gali & Mark Gertler, 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
NBER Working Papers
6442, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Richard Clarida & Jordi Galí & Mark Gertler, 1997.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
Economics Working Papers
350, Department of Economics and Business, Universitat Pompeu Fabra, revised May 1999.
[Downloadable!] Clarida, R. & Gali, J. & Gertler, M., 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and some Theory ,"
Working Papers
98-01, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!] Glenn D. Rudebusch, 1999.
"Is the Fed too timid? Monetary policy in an uncertain world ,"
Working Papers in Applied Economic Theory
99-05, Federal Reserve Bank of San Francisco.
[Downloadable!]
Other versions: David Romer, 2000.
"Keynesian Macroeconomics without the LM Curve ,"
Journal of Economic Perspectives ,
American Economic Association, vol. 14(2), pages 149-169, Spring.
[Downloadable!] (restricted)
Other versions: William Poole, 1999.
"Monetary policy rules? ,"
Review ,
Federal Reserve Bank of St. Louis, issue Mar, pages 3-12.
[Downloadable!]
Other versions:
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Ray C. Fair, 2009.
"Possible Macroeconomic Consequences of Large Future Federal Government Deficits ,"
Cowles Foundation Discussion Papers
1727, Cowles Foundation, Yale University, revised Oct 2009.
[Downloadable!]
Barbara Annicchiarico & Alessandro Piergallini, 2006.
"Inflation shocks and interest rate rules ,"
Economics Bulletin ,
Economics Bulletin, vol. 5(19), pages 1-7.
[Downloadable!]
Other versions: Philip Arestis, Malcolm Sawyer, 2003.
"The Nature and Role of Monetary Policy When Money Is Endogenous ,"
Economics Working Paper Archive
374, Levy Economics Institute, The.
[Downloadable!]
Other versions: Alistair Dieppe & Jerome Henry & Peter Mc Adam, .
"Labour market dynamics in the euro area: A model-based sensitivity analysis ,"
Modeling, Computing, and Mastering Complexity 2003
09, Society for Computational Economics.
[Downloadable!]
Mandler, Martin, 2006.
"Are there gains from including monetary aggregates and stock market indices in the monetary policy reaction function? A simulation study of recent U.S. monetary policy ,"
MPRA Paper
2318, University Library of Munich, Germany.
[Downloadable!]
Jean-Pascal Benassy, 2005.
"Interest Rate Rules, Price Determinacy and the Value of Money in a non Ricardian World ,"
Review of Economic Dynamics ,
Elsevier for the Society for Economic Dynamics, vol. 8(3), pages 651-667, July.
[Downloadable!] (restricted)
Bruno Merlevede & Joseph Plasmans & Bas van Aarle, 2003.
"A Small Macroeconomic Model of the EU-Accession Countries ,"
Open Economies Review ,
Springer, vol. 14(3), pages 221-250, July.
[Downloadable!] (restricted)
Luis Carranza & José Enrique Galdón Sánchez & Javier Gómez Biscarri, .
"Understanding the Relationship between Financial Development and Monetary Policy ,"
Faculty Working Papers
14/06, School of Economics and Business Administration, University of Navarra.
[Downloadable!]
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