Alternative Policy Rules and Post-Covid Fed Policies
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David H. Papell
und
Ruxandra Prodan-Boul
Abstract
The Revised Statement on Longer-Run Goals and Monetary Policy Strategy, adopted by the Federal Open Market Committee (FOMC) in August 2020, contains two major changes from the original 2012 statement. Policy decisions would attempt to mitigate shortfalls, rather than deviations, of employment from its maximum level and the FOMC would implement Flexible Average Inflation Targeting (FAIT). In August 2025, the FOMC essentially returned to the 2012 statement. We develop and analyze policy rules consistent with the original and revised statements and show how prescriptions from inertial rules are much more in accord with Fed policy than prescriptions from non-inertial rules. The differences between non-inertial and inertial rules are much larger than the differences among various non-inertial and inertial rules. The prescriptions are identical between traditional and FAIT rules. The Fed policy following the Covid-19 recession is equally well described by rules in accord with the original 2012 statement as by rules in accord with the revised 2020 statement.
Acknowledgments
We thank an anonymous referee for helpful comments and Sebin Nidhiri and Swati Singh for research assistance.
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© 2025 Walter de Gruyter GmbH, Berlin/Boston
Artikel in diesem Heft
- Frontmatter
- Editorial
- The End of US Dominance?
- Policy Papers (No Special Focus)
- Alternative Policy Rules and Post-Covid Fed Policies
- Accountability in Action: The European Parliament’s Assessment of the ECB 2024 Annual Report
- Germany’s Fiscal Turn: Structural Challenges, Political Risks, and European Spillover Effects
- Trumpian Neomercantilism, European Fiscal Capacity and the Global Minimum Tax
- Factors Driving India’s Growth: Challenges and Policy Measures
- Policy Forum: The End of US Dominance?
- After Multilateralism: The US and the World Bank
- The Triple Mandate of Development, Climate, and Humanitarian Aid
- The WTO Minus One: A Rules-Based Global Trading System Without The US?
- The Fed in the Crosshairs
- Will China Replace the USA as the World’s Leading Power
- Will the US Protect Taiwan in Case of Chinese Military Aggression?
- War in Ukraine: Is Russia Challenging the US Global Dominance?
- A Fragile Surge: European Support to Ukraine in Early 2025 – New Insights from the Kiel Institute Ukraine Support Tracker
- A Strawman Proposal to Use International Flexibility in Achieving Developed Countries Climate Targets to Catalyse Global Decarbonisation
Artikel in diesem Heft
- Frontmatter
- Editorial
- The End of US Dominance?
- Policy Papers (No Special Focus)
- Alternative Policy Rules and Post-Covid Fed Policies
- Accountability in Action: The European Parliament’s Assessment of the ECB 2024 Annual Report
- Germany’s Fiscal Turn: Structural Challenges, Political Risks, and European Spillover Effects
- Trumpian Neomercantilism, European Fiscal Capacity and the Global Minimum Tax
- Factors Driving India’s Growth: Challenges and Policy Measures
- Policy Forum: The End of US Dominance?
- After Multilateralism: The US and the World Bank
- The Triple Mandate of Development, Climate, and Humanitarian Aid
- The WTO Minus One: A Rules-Based Global Trading System Without The US?
- The Fed in the Crosshairs
- Will China Replace the USA as the World’s Leading Power
- Will the US Protect Taiwan in Case of Chinese Military Aggression?
- War in Ukraine: Is Russia Challenging the US Global Dominance?
- A Fragile Surge: European Support to Ukraine in Early 2025 – New Insights from the Kiel Institute Ukraine Support Tracker
- A Strawman Proposal to Use International Flexibility in Achieving Developed Countries Climate Targets to Catalyse Global Decarbonisation
