Taylor Rules, Long-Run Growth and Real Uncertainty

Barbara Annicchiarico () and Lorenza Rossi

No 100, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: We study the effects of real uncertainty on long-run growth under different Taylor-type rules. We find a non-negligible relationship between real uncertainty and growth, which depends on the source of real uncertainty as well as the type of the Taylor rule considered. Importantly, when uncertainty is due to investment specific shocks, it is highly detrimental for growth, unless the Central Bank follows a strong inflation targeting rule. Furthermore, we find that in the presence of real uncertainty, there is a positive correlation between average growth and average inflation under pure inflation targeting regimes and negative otherwise.

Keywords: Taylor rules; Endogenous Growth; Real Uncertainty. (search for similar items in EconPapers)
JEL-codes: E32 E52 O42 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2015-04
New Economics Papers: this item is included in nep-fdg, nep-gro, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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