Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory

@article{Clarida1998MonetaryPR,
  title={Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory},
  author={Richard Clarida and Jordi Gal{\'i} and Mark Gertler},
  journal={Monetary Economics},
  year={1998}
}
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… Expand
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We estimate a forward-looking monetary policy reaction function for the postwar United States economy, before and after Volcker’s appointment as Fed Chairman in 1979. Our results point to substantialExpand
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