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Estimated Interest Rate Rules: Do they Determine Determinacy Properties?
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Henrik Jensen
Published/Copyright:
May 5, 2011
I demonstrate that econometric estimations of nominal interest rate rules may tell little, if anything, about an economy's determinacy properties. In particular, correct inference about the interest-rate response to inflation provides no information about determinacy. Instead, it could reveal whether optimal monetary policymaking is performed under discretion or commitment.
Keywords: monetary policy; interest rate rules; Taylor rules; equilibrium determinacy; discretion versus rules
Published Online: 2011-5-5
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Keywords for this article
monetary policy;
interest rate rules;
Taylor rules;
equilibrium determinacy;
discretion versus rules
Articles in the same Issue
- Advances Article
- Trend Agnostic One-Step Estimation of DSGE Models
- Contributions Article
- Human Capital, Technology Adoption and Development
- Optimal Monetary Policy and Social Insurance in a Small Open Economy
- Estimated Interest Rate Rules: Do they Determine Determinacy Properties?
- Cyclical Upgrading of Labor and Employment Differences across Skill Groups
- Short-Run and Long-Run Effects of Banking in a New Keynesian Model
- Simple Analytics and Empirics of the Government Spending Multiplier and Other "Keynesian" Paradoxes
- Private Equity Premium and Aggregate Uncertainty in a Model of Uninsurable Investment Risk
- Economic Development and Heterogeneity in the Great Moderation among the States
- Social Security, Differential Fertility, and the Dynamics of the Earnings Distribution
- The Quality of Public Investment
- House Price Growth, Collateral Constraints and the Accumulation of Homeowner Debt in the United States
- The "Elusive" Capital-User Cost Elasticity Revisited
- Asset Pricing and Housing Supply in a Production Economy
- Fiscal Calculus and the Labor Market
- The Price of Egalitarianism
- Topics Article
- How Costly is CPI Inflation Targeting: A Two Sector Model with No Labor Mobility
- Cyclical Behavior of a Matching Model with Capital Investment
- The Cost Channel, Indeterminacy, and Price-Level versus Inflation Stabilization
- Monetary Policy Shocks and Risk Premia in the Interbank Market
- Slow-Moving Traps
- An Alternative Method for Measuring Financial Frictions
- Bubbles and Self-Fulfilling Crises
- Structural Breaks and the Fisher Effect
- Welfare Costs of Inflation and the Circulation of U.S. Currency Abroad
- Trade Liberalization, Competition and Growth
- The Dynamic Relationship between Inflation and Output Growth in a Cash-Constrained Economy
- Inflation Nutters? Modelling the Flexibility of Inflation Targeting
- Does Insurance Matter for Growth: Empirical Evidence from OECD Countries
- 28 Months Later: How Inflation Targeters Outperformed Their Peers in the Great Recession
- Time-Varying Returns, Intertemporal Substitution and Cyclical Variation in Consumption
- Micro-Data on Nominal Rigidity, Inflation Persistence and Optimal Monetary Policy
- How the Housing and Financial Wealth Effects Have Changed over Time
- Technology Shocks and Employment: Evidence from U.S. Firm-Level Data
- Monetary Policy Transmission under Zero Interest Rates: An Extended Time-Varying Parameter Vector Autoregression Approach
- Alternative Perspectives on Optimal Public Debt Adjustment
- Policy Distortions and Aggregate Productivity: The Role of Idiosyncratic Shocks
- Sector-Specific Markup Fluctuations and the Business Cycle: A Cross-Country Analysis
- External Debts and Current Account Adjustments
- Welfare Implications of Regional Asymmetries in a Monetary Union
- News Shocks and the External Finance Premium
- Interest Rates and Real Business Cycles in Emerging Markets