| Title |
Monetary Policy, Inflation And Unemployment: In Defense Of The Federal Reserve |
| ID_Doc |
74077 |
| Authors |
Groshenny, N |
| Title |
Monetary Policy, Inflation And Unemployment: In Defense Of The Federal Reserve |
| Year |
2013 |
| Published |
Macroeconomic Dynamics, 17, 6 |
| DOI |
10.1017/S1365100512000053 |
| Abstract |
To what extent did deviations from the Taylor rule between 2002 and 2006 help to promote price stability and maximum sustainable employment? To address that question, I estimate a New Keynesian model with unemployment and perform a counterfactual experiment where monetary policy strictly follows a Taylor rule over the period 2002:Q1-2006:Q4. I find that such a policy would have generated a sizeable increase in unemployment and resulted in an undesirably low rate of inflation. Around mid-2004, when the counterfactual deviates the most from the actual series, the model indicates that the probability of an unemployment rate greater than 8% would have been as high as 80%, whereas the probability of an inflation rate above 1% would have been close to zero. |
| Author Keywords |
Business Cycle Models; Inflation; Unemployment; Taylor Rules |
| Index Keywords |
Index Keywords |
| Document Type |
Other |
| Open Access |
Open Access |
| Source |
Social Science Citation Index (SSCI) |
| EID |
WOS:000322824200006 |
| WoS Category |
Economics |
| Research Area |
Business & Economics |
| PDF |
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