The Explanatory Power of Monetary Policy Rules
This paper shows that the theory of monetary policy rules is able to explain, predict, and help understand a variety of phenomenon in macroeconomics and finance, including the Great Moderation, the correlation between exchange rates and interest rates, and the shift in the response of the term structure of interest rates to inflation and output. Although the theory was originally designed for normative reasons, it has turned out to have positive implications which validate it scientifically. And while initially focused on the United States, it has applied equally well in other countries.
|Date of creation:||Dec 2007|
|Publication status:||published as John B Taylor, 2007. "The Explanatory Power of Monetary Policy Rules," Business Economics, Palgrave Macmillan Journals, vol. 42(4), pages 8-15, October.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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"Exchange Rate Models Are Not As Bad As You Think,"
in: NBER Macroeconomics Annual 2007, Volume 22, pages 381-441
National Bureau of Economic Research, Inc.
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