How credible is the Federal Reserve?:A structural estimation of policy re-optimizations

Aeimit Lakdawala and Davide Debortoli

No 1333, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: Using a Markov-switching Bayesian likelihood approach, we examine the behavior of the Federal Reserve over the post WWII period. We estimate a medium-scale macroeconomic model, where monetary policy is chosen by a central bank endowed with a commitment technology, and where a regime-switching process governs occasional re-optimizations of announced plans. Our estimates show that deviations from commitment plans were rather infrequent: seven main re-optimization episodes are identified, at times consistent with conventional narrative accounts of the US monetary history. Our framework is used to discuss the role of policy re-optimizations as sources monetary policy shocks, and to assess the importance of central bank credibility through counterfactual analysis.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (12)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: How Credible Is the Federal Reserve? A Structural Estimation of Policy Re-optimizations (2016)
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:red:sed013:1333

Access Statistics for this paper

More papers in 2013 Meeting Papers from Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().