Monetary Policy in a Data-Rich Environment *

  title={Monetary Policy in a Data-Rich Environment *},
  author={Ben Bernanke and Jean M Boivin},
Most empirical analyses of monetary policy have been confined to frameworks in which the Federal Reserve is implicitly assumed to exploit only a limited amount of information, despite the fact that the Fed actively monitors literally thousands of economic time series. This article explores the feasibility of incorporating richer information sets into the analysis, both positive and normative, of Fed policymaking. We employ a factor-model approach, developed by Stock and Watson (1999a,b), that… CONTINUE READING