Paper #350

Títol:

Monetary policy rules and macroeconomic stability: Evidence and some theory

Autors:

Richard Clarida, Jordi Galí i Mark Gertler

Data:

Març 1997

Resum:

We estimate a forward-looking monetary policy reaction function for the postwar United States economy, before and after Volcker's appointment as Fed Chairman in 1979. Our results point to substantial differences in the estimated rule across periods. In particular, interest rate policy in the Volcker-Greenspan period appears to have been much more sensitive to changes in expected inflation than in the pre-Volcker period. We then compare some of the implications of the estimated rules for the equilibrium properties of inflation and output, using a simple macroeconomic model, and show that the Volcker-Greenspan rule is stabilizing.

Paraules clau:

Monetary policy rules, business cycles, Taylor rules, sunspot fluctuations

Codis JEL:

E32, E52

Àrea de Recerca:

Macroeconomia i Economia Internacional

Publicat a:

Quarterly Journal of Economics, vol. CXV, issue 1, 147-180, 2000

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