Monetary Policy Rules and Macroeconomic Stability: Some New Evidence
- (pp. 491-503)
Abstract
I revisit the question of indeterminacy in US monetary policy using limited-information identification-robust methods. I find that the conclusions of Clarida, Galí, and Gernter (2000) that policy was inactive before 1979 are robust, but the evidence over the Volcker-Greenspan periods is inconclusive. I show that this is in fact consistent with policy being active over that period. Problems of identification also arise because policy reaction has been more gradual recently. At a methodological level, the paper demonstrates that identification issues should be taken seriously, and that identification-robust methods can be informative even when they produce wide confidence sets. (E31, E32, E52, E65,)Citation
Mavroeidis, Sophocles. 2010. "Monetary Policy Rules and Macroeconomic Stability: Some New Evidence." American Economic Review, 100 (1): 491-503. DOI: 10.1257/aer.100.1.491Additional Materials
JEL Classification
- E31 Price Level; Inflation; Deflation
- E32 Business Fluctuations; Cycles
- E52 Monetary Policy
- E65 Studies of Particular Policy Episodes