Historical Performance of Rule-Like Monetary Policy

Authors

Yevgeniy Teryoshin, University of Nevada, Las VegasFollow

Document Type

Report

Publication Date

11-30-2020

Publication Title

Standford Institute for Economic Policy Research

Publisher

Stanford University

First page number:

1

Last page number:

45

Abstract

I construct the differences between rule-based monetary policy for multiple interest rate rules and the actual interest rates for nine countries using real-time data available to policymakers at the time. Using structural break analysis, regressions at the country level, and panel regressions, which are robust to different measures of output and inflation, I document that more rule-like policy is associated with greater economic stability. Additionally, I find evidence that the association between rule-like policy and greater economic stability is causal by examining the timing of the structural breaks and the changes in central bank policy, using vector autoregressions, and regression specifications relying on the temporal ordering of lagged deviations from the policy rules.

Keywords

Monetary policy; Rules versus discretion; Taylor rules

Language

English

Repository Citation

Teryoshin, Y. (2020). Historical Performance of Rule-Like Monetary Policy. Standford Institute for Economic Policy Research 1-45. Stanford University.