The Macroeconomic Performance of Monetary Policies. A Stochastic Simulation Based on the Taylor’s Rule
In this paper we try to check if and how the macroeconomic performances induced by a Taylor’s rule based kind of monetary policy are (or not) more efficient than those effectively induced by the most important central bank’s monetary policies. In this kind of respect, we use a simple three equations model: a Phillips equation, an aggregate demand equation and a fixing rule for the main interest rate. Based on historical simulation as well as on stochastic simulation, it turns out that macroeconomic performances, in terms of inflation and productivity gap, would be more stable and efficient if the Taylor’s rule would be used by a certain central bank in fixing its main interest rate.
Volume (Year): 1 (2011)
Issue (Month): 6 (October)
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- Svensson, Lars E. O., 1999.
"Inflation targeting as a monetary policy rule,"
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- Taylor, J.B., 1998. "The Robustness and Efficiency of Monetary Policy Rules as Guidelines for Interest Rate Setting by European Central Bank," Papers 649, Stockholm - International Economic Studies. Full references (including those not matched with items on IDEAS)
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