Financial Crisis, Taylor Rule and the Fed

Saten Kumar ()
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Saten Kumar: Department of Economics, Faculty of Business and Law, Auckland University of Technology

No 2014-02, Working Papers from Auckland University of Technology, Department of Economics

Abstract: We investigate how the Federal Reserve (Fed) hit the zero lower bound (ZLB) interest rate while operating under a Taylor-type policy rule. We estimate a reaction function and the results indicate that during the crisis Fed increased the weight on output without also increasing the weight on inflation led them to hit the ZLB.

Keywords: Ambiguity; Belief Function; Investment Bubble; Inference (search for similar items in EconPapers)
Pages: 12 pages
Date: 2014-02
New Economics Papers: this item is included in nep-cba, nep-ger, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:aut:wpaper:201402

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