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Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory / Richard Clarida, Jordi Gali, Mark Gertler.
- Format:
- Book
- Author/Creator:
- Clarida, Richard.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w6442.
- NBER working paper series no. w6442
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Monetary Policy Rules and Macroeconomic Stability
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1998.
- Summary:
- We estimate a forward-looking monetary policy reaction function for the postwar US economy, pre- and post-October 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 equilibrium properties of inflation and output, using a simple macroeconomic model. The pre-Volcker rule is shown to be consistent with the possibility of persistent, self-fulfilling fluctuations in inflation and output. In contrast, the Volcker-Greenspan rule is stabilizing.
- Notes:
- Print version record
- March 1998.
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