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Greenspan and the Greenbook

  • Robert Tchaidze
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    A vast literature has emerged using Taylor rules to analyze monetary policy Although very attractive both theoretically and empirically such rules imply a mechanical response by the policy variable to fundamental ones This study looks for empirical evidence of a more sophisticated monetary policy one which takes into account expected future developments An important piece of information I use is the Greenbook forecast series which are calculated by the Federal Reserve Board's Research Department prior to the Board meetings Using Greenbook forecasts allows calculation of future inflation shocks as expected by the Fed These shocks are significant in the estimated Taylor rule confirming that policymaking is forward-looking In addition using Greenbook forecasts allows one to obtain better real time estimates of the potential output and thus to obtain a more precise characterization of monetary policy

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    Paper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 472.

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    Date of creation: Mar 2002
    Date of revision:
    Handle: RePEc:jhu:papers:472
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    1. Orphanides, Athanasios, 2002. "Activist stabilization policy and inflation: The Taylor rule in the 1970s," CFS Working Paper Series 2002/15, Center for Financial Studies (CFS).
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    19. Robert R Tchaidze, 2001. "Estimating Taylor Rules in a Real Time Setting," Economics Working Paper Archive 457, The Johns Hopkins University,Department of Economics.
    20. Sharon Kozicki, 1999. "How useful are Taylor rules for monetary policy?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 5-33.
    21. Athanasios Orphanides, 1998. "Monetary policy evaluation with noisy information," Finance and Economics Discussion Series 1998-50, Board of Governors of the Federal Reserve System (U.S.).
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