New economy: new policy rules?

James Bullard Eric Schaling
Authors registered in the RePEc Author Service: Eric Schaling () and James Bullard ()

No 53, Computing in Economics and Finance 2001 from Society for Computational Economics

Abstract: We wish to understand the implications of recent shifts in US productivity for the structure of optimal monetary policy rules. Accordingly, we augment a standard inflation targeting model in which a forward-looking version of the Taylor rule constitutes the optimal monetary policy with regime switching in productivity, and calculate the optimal rule. We find that a rule that incorporates leading indicators about regimes significantly outperforms the Taylor-type rule. We use this result to comment on the new economy events of the 1990s and the stagflation events of the 1970s.

Keywords: economic structure; inflation; monetary policy; new economy (search for similar items in EconPapers)
JEL-codes: C32 E47 E52 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-tid
Date: 2001-04-01
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Working Paper: New economy: new policy rules? (2000)
Working Paper: New economy - new policy rules? (2000)
Journal Article: New economy-new policy rules (2001)
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