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The Taylor rule: a guidepost for monetary policy?

Author

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  • Charles T. Carlstrom
  • Timothy S. Fuerst

Abstract

The Taylor rule, which once was mentioned only in scholarly economics journals, now is popping up regularly in newsmagazines, finance journals, and central bankers' speeches. Does the Fed follow the rule? Should it? This Commentary explains what the Taylor rule is, discusses why it seems to describe Fed interest-rate setting, and argues that the rule is most valuable as a guideline rather than a prescription.

Suggested Citation

  • Charles T. Carlstrom & Timothy S. Fuerst, 2003. "The Taylor rule: a guidepost for monetary policy?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Jul.
  • Handle: RePEc:fip:fedcec:y:2003:i:jul
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    Cited by:

    1. Zolotoy, Leon & Frederickson, James R. & Lyon, John D., 2017. "Aggregate earnings and stock market returns: The good, the bad, and the state-dependent," Journal of Banking & Finance, Elsevier, vol. 77(C), pages 157-175.
    2. Smales, Lee A. & Apergis, Nick, 2016. "The influence of FOMC member characteristics on the monetary policy decision-making process," Journal of Banking & Finance, Elsevier, vol. 64(C), pages 216-231.
    3. Vu, Nam T., 2015. "Stock market volatility and international business cycle dynamics: Evidence from OECD economies," Journal of International Money and Finance, Elsevier, vol. 50(C), pages 1-15.

    More about this item

    Keywords

    Monetary policy ; Inflation (Finance);

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