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Monetary policy and stability during six periods in US economic history: 1959–2008: a novel, nonlinear monetary policy rule

  • Seip, Knut L.
  • McNown, Robert

We investigate the monetary policy of the Federal Reserve Board during six periods in US economic history 1959–2008. In particular, we examine the Fed's response to changes in three guiding variables: inflation, π, unemployment, U, and industrial production, y, during periods with low and high economic stability. We identify separate responses for the Fed's change in interest rate depending upon (i) the current rate, FF, and the guiding variables’ level below or above their average values and (ii) recent movements in inflation and unemployment. The change in rate, ΔFF, can then be calculated. We identify policies that both increased and decreased economic stability.

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Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 35 (2013)
Issue (Month): 2 ()
Pages: 307-325

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Handle: RePEc:eee:jpolmo:v:35:y:2013:i:2:p:307-325
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505735

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