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Federal Funds Rates Based on Seven Simple Monetary Policy Rules

Author

Listed:
  • Christian Garciga
  • Edward S. Knotek
  • Randal J. Verbrugge

Abstract

Monetary policymakers often use simple monetary policy rules, like the Taylor rule, as an input into their decision-making. However, there are many different simple rules, and there is no agreement on a single ?best? rule. We look at the federal funds rates coming from seven simple rules and three economic forecasts to investigate the range of results that can be produced. While there are some commonalities, we document that the differences in the federal funds rates suggested by the rules can be quite pronounced.

Suggested Citation

  • Christian Garciga & Edward S. Knotek & Randal J. Verbrugge, 2016. "Federal Funds Rates Based on Seven Simple Monetary Policy Rules," Economic Commentary, Federal Reserve Bank of Cleveland, issue July.
    • Handle: RePEc:fip:fedcec:00052
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    File URL: https://www.clevelandfed.org/en/newsroom-and-events/publications/economic-commentary/2016-economic-commentaries/ec-201607-federal-funds-rates-from-simple-policy-rules.aspx
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    Citations

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    Cited by:

    1. C. Bora Durdu & Alex Martin & Ilknur Zer, 2020. "The Role of US Monetary Policy in Banking Crises Across the World," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(1), pages 66-107, March.
    2. Ambrose, Brent W. & Coulson, N. Edward & Yoshida, Jiro, 2018. "Reassessing Taylor rules using improved housing rent data," Journal of Macroeconomics, Elsevier, vol. 56(C), pages 243-257.
    3. Edward S. Knotek, 2019. "Changing Policy Rule Parameters Implied by the Median SEP Paths," Economic Commentary, Federal Reserve Bank of Cleveland, issue April.
    4. Carla Soares & Nikolay Iskrev & Rita Fradique Lourenço, 2021. "Indicators of monetary policy stance and financial conditions: an overview," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    5. Hardik A. Marfatia, 2021. "Is the future really observable? A practical approach to model monetary policy rules," Empirical Economics, Springer, vol. 61(3), pages 1189-1223, September.

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