Monetary Policy Rules in Theory and in Practice: Evidence from the UK and the US

Juan P ez-Farrell ()
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Juan P ez-Farrell: Cardiff Business School
Authors registered in the RePEc Author Service: Juan Paez-Farrell

No E2007/13, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: Given the large amount of interaction between research on monetary policy and its practice, this paper examines whether some simple monetary policy rules that have been proposed in the academic literature, part of which has originated from within central banks, provide a reasonable characterisation of actual policy in the UK and the US. The paper finds that the simple rule that describes best actual US monetary policy is a speed limit rule with dynamics, whilst for the UK it is a forward-looking rule. The simpler dynamics in the UK's monetary policy rule are reflective of the lower persistence of inflation as a result of its policy of inflation targeting.

Pages: 30 pages
Date: 2007-05
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Related works:
Journal Article: Monetary policy rules in theory and in practice: evidence from the UK and the US (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2007/13

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