Title
Historical Performance of Rule-Like Monetary Policy
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.