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How reliable are Taylor rules? A view from asymmetry in the U.S. Fed funds rate

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  • Paolo Zagaglia

    (Department of Economics, Stockholm University, and Università Bocconi)

Abstract

This note raises the issue of whether asymmetry in estimated monetary-policy rules for the U.S. can be a spurious result due to model specification, rather than a robust feature of the estimated rules themselves. I estimate standard - linear - Taylor rules, and test for conditional symmetry using the procedures presented in Bai and Ng (2001a). The results cast doubt on Taylor rules providing a consistent description of the conduct of the Fed.

Suggested Citation

  • Paolo Zagaglia, 2006. "How reliable are Taylor rules? A view from asymmetry in the U.S. Fed funds rate," Economics Bulletin, AccessEcon, vol. 5(14), pages 1-11.
    • Handle: RePEc:ebl:ecbull:eb-05e40004
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    References listed on IDEAS

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    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology

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