Specification of Policy Rules and Performance Measures in Multicountry Simulation Studies
AbstractMuch recent analysis of international monetary and fiscal policy issues, such as the choice of an exchange-rate regime or the design of a policy coordination scheme, has been conducted by stochastic simulations with multicountry econometric models. In these studies, it has become standard practice to consider alternative policy rules of a particular form that calls for departures of a policy instrument, from some “baseline” reference path, that are proportional to deviations of a specified target variable from its own baseline path. The present paper argues, however, that this standard rule form is seriously defective for evaluating such issues because the implied rules (1) often fail to be operational and (2) have associated performance measures that can be misleading in important cases. An example is presented that concerns the international “assignment problem” of optimally pairing instruments with policy objectives.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 92/41.
Date of creation: 01 Jun 1992
Date of revision:
Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
Other versions of this item:
- McCallum, Bennett T., 1994. "Specification of policy rules and performance measures in multicountry simulation studies," Journal of International Money and Finance, Elsevier, Elsevier, vol. 13(3), pages 259-275, June.
- Bennett McCallum, 1992. "Specification of Policy Rules and Performance Measures in Multicountry Simulation Studies," NBER Working Papers 4233, National Bureau of Economic Research, Inc.
- F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
- E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Orphanides, Athanasios, 2003.
"Monetary policy evaluation with noisy information,"
Journal of Monetary Economics, Elsevier,
Elsevier, vol. 50(3), pages 605-631, April.
- Athanasios Orphanides, 1998. "Monetary policy evaluation with noisy information," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 1998-50, Board of Governors of the Federal Reserve System (U.S.).
- Moreno, R. & Pasadilla, G. & Remolona, E., 1998.
"Asia's Financial Crisis: Lessons and Policy Responses,"
Papers, Economisch Institut voor het Midden en Kleinbedrijf-
98-02, Economisch Institut voor het Midden en Kleinbedrijf-.
- Ramon Moreno & Gloria Pasadilla & Eli Remolona, 1998. "Asia's financial crisis: lessons and policy responses," Pacific Basin Working Paper Series, Federal Reserve Bank of San Francisco 98-02, Federal Reserve Bank of San Francisco.
- Scheide, Joachim, 1998. "Central banks: no reason to ignore money," Kiel Discussion Papers 316, Kiel Institute for the World Economy (IfW).
- Mahir Binici & Yin-Wong Cheung, 2011.
"Exchange Rate Dynamics under Alternative Optimal Interest Rate Rules,"
1116, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Mahir Binici & Yin-Wong Cheung, 2011. "Exchange Rate Dynamics Under Alternative Optimal Interest Rate Rules," Working Papers, Hong Kong Institute for Monetary Research 362011, Hong Kong Institute for Monetary Research.
- Mahir Binici & Yin-Wong Cheung, 2011. "Exchange Rate Dynamics under Alternative Optimal Interest Rate Rules," CESifo Working Paper Series 3577, CESifo Group Munich.
- Orphanides, Athanasios, 2002.
"Activist stabilization policy and inflation: The Taylor rule in the 1970s,"
CFS Working Paper Series
2002/15, Center for Financial Studies (CFS).
- Athanasios Orphanides, 2000. "Activist stabilization policy and inflation: the Taylor rule in the 1970s," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2000-13, Board of Governors of the Federal Reserve System (U.S.).
- Alexis Penot, 1998. "La politique monétaire française à travers la règle de Taylor," Revue d'Économie Financière, Programme National Persée, Programme National Persée, vol. 49(5), pages 135-154.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).
If references are entirely missing, you can add them using this form.