Monetary policy and stability during six periods in US economic history: 1959–2008: a novel, nonlinear monetary policy rule

Knut L. Seip and Robert McNown

Journal of Policy Modeling, 2013, vol. 35, issue 2, 307-325

Abstract: We investigate the monetary policy of the Federal Reserve Board during six periods in US economic history 1959–2008. In particular, we examine the Fed's response to changes in three guiding variables: inflation, π, unemployment, U, and industrial production, y, during periods with low and high economic stability. We identify separate responses for the Fed's change in interest rate depending upon (i) the current rate, FF, and the guiding variables’ level below or above their average values and (ii) recent movements in inflation and unemployment. The change in rate, ΔFF, can then be calculated. We identify policies that both increased and decreased economic stability.

Keywords: Monetary policy rule; Economic stability; Taylor rule; Nonlinear methods; USA (search for similar items in EconPapers)
JEL-codes: C22 C54 E3 E5 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:35:y:2013:i:2:p:307-325

DOI: 10.1016/j.jpolmod.2012.03.004

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