Estimating Monetary Policy Rules When Nominal Interest Rates Are Stuck at Zero

Jinill Kim and Seth Pruitt ()

Journal of Money, Credit and Banking, 2017, vol. 49, issue 4, 585-602

Abstract: Did the Federal Reserve's response to economic fundamentals change with the onset of the Global Financial Crisis? Estimation of a monetary policy rule to answer this question faces a censoring problem since the interest rate target has been set at the zero lower bound since late 2008. Surveys by forecasters allow us to sidestep the problem and to use conventional regressions and break tests. We find that, in the opinion of forecasters, the Fed's inflation response has decreased and the unemployment response has increased, which suggests that the Federal Reserve's commitment to stable inflation has become weaker in the eyes of the professional forecasters.

Date: 2017
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Citations: View citations in EconPapers (6)

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https://doi.org/10.1111/jmcb.12391

Related works:
Working Paper: Estimating Monetary Policy Rules When Nominal Interest Rates Are Stuck at Zero (2015)
Working Paper: Estimating Monetary Policy Rules When Nominal Interest Rates Are Stuck at Zero (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:49:y:2017:i:4:p:585-602

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