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An Experimental Test Of Taylor-Type Rules With Inexperienced Central Bankers Author info | Abstract | Publisher info | Download info | Related research | Statistics Jim Engle-Warnick (McGill University)
Nurlan Turdaliev (McGill University)
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We experimentally test whether a class of monetary policy decision rules describes decision making in a population of inexperienced central bankers. In our experiments, subjects repeatedly set the short-term interest rate for a computer economy with inflation as their target. A large majority of subjects learn to successfully control inflation. We find that Taylor-type rules fit the choice data well, and are instrumental in characterizing heterogeneity in decision making. Our experiment is the first to begin to organize data experimentally with an eye on monetary policy rules for this, one of the most widely watched and analyzed decisions in economics.
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Paper provided by EconWPA in its series Macroeconomics with number
0511022.
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Length: 37 pages
Date of creation: 19 Nov 2005Date of revision:
Handle: RePEc:wpa:wuwpma:0511022Note: Type of Document - pdf; pages: 37Contact details of provider: Web page: http://129.3.20.41
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Keywords: monetary policy Taylor rule experimental economics repeated games Other versions of this item:
Find related papers by JEL classification: C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
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Jim Engle-Warnick & Sonia Laszlo, 2006.
"Learning-by-Doing in an Ambiguous Environment ,"
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