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Monetary Policy Models

Author

Listed:
  • Christopher A. Sims

    (Princeton University)

Abstract

I have written several papers for BPEA (2002; 1996; 1982) looking at the relation of multiple equation quantitative economic models to the process of monetary policy making. When the first of these papers was written, the impact of the rational expectations critique in undermining academic interest in quantitative modeling for monetary policy was apparent. Many, maybe most, economists took the Lucas critique to imply that the month-to-month business of choosing monetary policy actions in the light of current information was trivial or irrelevant. Economists were thought to have nothing useful to say about it. Economists were supposed to contemplate only the choice of policy rules, which were modeled as functions mapping the state of the economy into policy actions.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Christopher A. Sims, 2007. "Monetary Policy Models," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 38(2), pages 75-90.
  • Handle: RePEc:bin:bpeajo:v:38:y:2007:i:2007-2:p:75-90
    as

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    File URL: https://www.brookings.edu/wp-content/uploads/2007/09/2007b_bpea_sims.pdf
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    References listed on IDEAS

    as
    1. Harald Hau & Hélène Rey, 2006. "Exchange Rates, Equity Prices, and Capital Flows," Review of Financial Studies, Society for Financial Studies, vol. 19(1), pages 273-317.
    2. Eric M. Leeper & Christopher A. Sims & Tao Zha, 1996. "What Does Monetary Policy Do?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(2), pages 1-78.
    3. Pedro Alvarez-Lois & Richard Harrison & Laura Piscitelli & Alasdair Scott, 2005. "Taking DSGE models to the policy environment," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
    4. Christopher A. Sims, 1982. "Policy Analysis with Econometric Models," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 13(1), pages 107-164.
    5. Frank Smets & Raf Wouters, 2003. "An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1123-1175, September.
    6. Ingram, Beth F. & Whiteman, Charles H., 1994. "Supplanting the 'Minnesota' prior: Forecasting macroeconomic time series using real business cycle model priors," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 497-510, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Hassan, Rubina & Shahzad, Mirza Muhammad, 2011. "A macroeconometric framework for monetary policy evaluation: A case study of Pakistan," Economic Modelling, Elsevier, vol. 28(1-2), pages 118-137, January.
    2. Levine, Paul & McAdam, Peter & Pearlman, Joseph, 2012. "Probability models and robust policy rules," European Economic Review, Elsevier, vol. 56(2), pages 246-262.
    3. João Sousa & Ricardo M. Sousa, 2011. "Asset Returns Under Model Uncertainty: Evidence from the euro area, the U.K. and the U.S," Working Papers w201119, Banco de Portugal, Economics and Research Department.
    4. Daly, Hounaida & Smida, Mounir, 2013. "Interaction entre politique monétaire et politique budgétaire:Cas de la Grèce
      [Fiscal and Monetary Policy Interactions : The Greece Case]
      ," MPRA Paper 45931, University Library of Munich, Germany.
    5. Daly, Hounaida & Smida, Mounir, 2014. "Fiscal Theory of Price Level," MPRA Paper 60142, University Library of Munich, Germany.
    6. repec:eee:ecmode:v:70:y:2018:i:c:p:511-524 is not listed on IDEAS
    7. João Sousa & Ricardo M. Sousa, 2011. "Asset Returns Under Model Uncertainty: Evidence from the euro area, the U.K. and the U.S," Working Papers w201119, Banco de Portugal, Economics and Research Department.
    8. repec:oup:oxford:v:34:y:2018:i:1-2:p:269-286. is not listed on IDEAS
    9. Daly, Hounaida & Smida, Mounir, 2013. "La coordination des politiques monétaire et budgétaire: Aperçu théorique
      [Coordination of monetary and fiscal policies: Theoretical Overview]
      ," MPRA Paper 48020, University Library of Munich, Germany.

    More about this item

    Keywords

    macroeconomics; Monetary Policy Models;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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