Should the monetary policy rule be different in a financial crisis?

Monika Piazzesi

Journal of Economic Dynamics and Control, 2014, vol. 49, issue C, 18-20

Abstract: This article reviews the finding that standard loss functions in output and inflation are higher during discretionary periods than in periods during which monetary policy is described by a rule, such as the Taylor rule. It shows that the finding is consistent with earlier research, but argues that we really do not know if the Taylor rule would have improved performance during the recent financial crisis. The article then considers modifications of policy rules to deal with changes in interest rate spreads, credit aggregates and banks׳ balance sheets.

Keywords: Monetary policy rule; Discretion; Financial crises; Interest rate spreads (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:49:y:2014:i:c:p:18-20

DOI: 10.1016/j.jedc.2014.09.016

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