Historical performance of rule-like monetary policy

Yevgeniy Teryoshin

Journal of International Money and Finance, 2023, vol. 130, issue C

Abstract: I construct the differences between rule-based monetary policy for multiple interest rate rules and the actual interest rates for nine countries using real-time data available to policymakers at the time. Using structural break analysis, regressions at the country level, and panel regressions, which are robust to different measures of output and inflation, I document that more rule-like policy is associated with greater economic stability primarily though improved inflation stability. Additionally, I find evidence that the association between rule-like policy and greater economic stability is causal by examining the timing of the structural breaks and the changes in central bank policy and Granger causality testing.

Keywords: Monetary policy; Rules versus discretion; Taylor rules (search for similar items in EconPapers)
JEL-codes: E52 E60 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:130:y:2023:i:c:s0261560622001693

DOI: 10.1016/j.jimonfin.2022.102766

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