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Estimated Interest Rate Rules: Do they Determine Determinacy Properties?

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  • Jensen, Henrik

Abstract

No. I demonstrate that econometric estimations of nominal interest rate rules may tell little, if anything, about an economy's determinacy properties. In particular, correct inference about the interest-rate response to inflation provides no information about determinacy. Instead, it could reveal whether optimal monetary policymaking is performed under discretion or commitment.

Suggested Citation

  • Jensen, Henrik, 2009. "Estimated Interest Rate Rules: Do they Determine Determinacy Properties?," CEPR Discussion Papers 7555, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7555
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    Cited by:

    1. Ravn Søren Hove, 2012. "Has the Fed Reacted Asymmetrically to Stock Prices?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-36, June.
    2. Ragna Alstadheim & Øistein Røisland, 2017. "When Preferences for a Stable Interest Rate Become Self‐Defeating," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(2-3), pages 393-415, March.
    3. Chatelain, Jean-Bernard & Ralf, Kirsten, 2014. "Stability and Identification with Optimal Macroprudential Policy Rules," EconStor Preprints 95979, ZBW - Leibniz Information Centre for Economics.
    4. Aastrup, Morten & Jensen, Henrik, 2010. "What Drives the European Central Bank's Interest-Rate Changes?," CEPR Discussion Papers 8160, C.E.P.R. Discussion Papers.
    5. Blake, Andrew P., 2012. "Determining optimal monetary speed limits," Economics Letters, Elsevier, vol. 116(2), pages 269-271.
    6. Pelin Ilbas & Øistein Røisland & Tommy Sveen, 2013. "The influence of the Taylor rule on US monetary policy," Working Paper 2013/04, Norges Bank.

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    More about this item

    Keywords

    Equilibrium determinacy; Estimated Taylor rules; Interest rate rules; Monetary policy; Rules vs. discretion.;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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