One for Some or One for All? Taylor Rules and Interregional Heterogeneity
We document a novel empirical phenomenon: the U.S. Federal Reserve appears to set interest rates partly in response to regional economic disparities. This result is remarkably robust even after controlling for a wide variety of factors, including the central bank’s information set and a battery of explanatory variables. We argue that this finding likely does not reflect an explicit concern about regional differences on the part of policymakers but instead can be explained by a model with non-linear regional Phillips curves. Consistent with the predictions of this model, we find that the Federal Reserve responds disproportionately to fluctuations in low unemployment states. Alternative explanations based on differential effects of monetary policy across regions or regional preferences on the part of voting members of the FOMC cannot account for this finding.
(This abstract was borrowed from another version of this item.)
Volume (Year): 44 (2012)
Issue (Month): (03)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Huefner, Felix P & Friedrich Heinemann, 2003.
"Is the View from the Eurotower Purely European? - National Divergence and ECB Interest Rate Policy,"
Royal Economic Society Annual Conference 2003
110, Royal Economic Society.
- Friedrich Heinemann & Felix P. Huefner, 2004. "Is The View From The Eurotower Purely European? - National Divergence And Ecb Interest Rate Policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(4), pages 544-558, 09.
- Heinemann, Friedrich & Huefner, Felix P., 2002. "Is the View from the Eurotower Purely European? National Divergence and ECB Interest Rate Policy," ZEW Discussion Papers 02-69, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Christina D. Romer & David H. Romer, 2004.
"A New Measure of Monetary Shocks: Derivation and Implications,"
American Economic Review,
American Economic Association, vol. 94(4), pages 1055-1084, September.
- Christina D. Romer & David H. Romer, 2003. "A New Measure of Monetary Shocks: Derivation and Implications," NBER Working Papers 9866, National Bureau of Economic Research, Inc.
- Lawrence J. Christiano & Wouter J. Den Haan, 1995.
"Small Sample Properties of GMM for Business Cycle Analysis,"
NBER Technical Working Papers
0177, National Bureau of Economic Research, Inc.
- Chistiano, Lawrence J & den Haan, Wouter J, 1996. "Small-Sample Properties of GMM for Business-Cycle Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(3), pages 309-27, July.
- Lawrence J. Christiano & Wouter Den Haan, 1995. "Small sample properties of GMM for business cycle analysis," Staff Report 199, Federal Reserve Bank of Minneapolis.
- Lawrence J. Christiano & Wouter den Haan, 1995. "Small sample properties of GMM for business cycle analysis," Working Paper Series, Macroeconomic Issues 95-3, Federal Reserve Bank of Chicago.
When requesting a correction, please mention this item's handle: RePEc:mcb:jmoncb:v:44:y:2012:i::p:401-431. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.