Identification with Taylor Rules: A Critical Review

John H. Cochrane ()

No 13410, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The parameters of the Taylor rule relating interest rates to inflation and other variables are not identified in new-Keynesian models. Thus, Taylor rule regressions cannot be used to argue that the Fed conquered inflation by moving from a "passive" to an "active" policy in the early 1980s.

JEL-codes: E3 E31 E52 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2007-09
Note: EFG ME
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