Forward-looking versus backward-looking Taylor rules

Charles Carlstrom () and Timothy S. Fuerst ()

No 9, Working Paper from Federal Reserve Bank of Cleveland

Abstract: This paper analyzes the restrictions necessary to ensure that the policy rule used by the central bank does not introduce real indeterminacy into the economy. It conducts this analysis in a flexible price economy and a sticky price model. A robust conclusion is that to ensure determinacy, the monetary authority should follow a backward-looking rule where the nominal interest rate responds aggressively to past inflation rates.

Keywords: Monetary; policy (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mon
Date: 2000
View list of references View citations in EconPapers

Downloads: (external link)
http://www.clevelandfed.org/research/workpaper/2000/Wp0009.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:fip:fedcwp:0009

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper from Federal Reserve Bank of Cleveland
Contact information at EDIRC.
Series data maintained by Diane Rosenberger ().