Historical monetary policy analysis and the Taylor rule

Athanasios Orphanides

No 2003-36, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This study examines the usefulness of the Taylor-rule framework as an organizing device for describing the policy debate and evolution of monetary policy in the United States. Monetary policy during the 1920s and since the 1951 Treasury-Federal Reserve Accord can be broadly interpreted in terms of this framework with rather surprising consistency. In broad terms, during these periods policy has been generally formulated in a forward-looking manner with price stability and economic stability serving as implicit or explicit guides. As early as the 1920s, measures of real economic activity relative to \"normal\" or \"potential\" supply appear to have influenced policy analysis and deliberations. Confidence in such measures as guides for activist monetary policy proved counterproductive at times, resulting in excessive activism, such as during the Great Inflation and at the brink of the Great Depression. Policy during the past two decades is broadly consistent with natural-growth targeting variants of the Taylor rule that exhibit less activism.

Keywords: Monetary policy; Inflation (Finance) (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-hpe and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (432)

Downloads: (external link)
http://www.federalreserve.gov/pubs/feds/2003/200336/200336abs.html (text/html)
http://www.federalreserve.gov/pubs/feds/2003/200336/200336pap.pdf (application/pdf)

Related works:
Journal Article: Historical monetary policy analysis and the Taylor rule (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2003-36

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().