Finding the equilibrium real interest rate in a fog of policy deviations

Recently there has been an explosion of research on whether the equilibrium real interest rate has declined, an issue with significant implications for monetary policy. A common finding is that the rate has declined. In 
Recently there has been an explosion of research on whether the equilibrium real interest rate has declined, an issue with significant implications for monetary policy. A common finding is that the rate has declined. In this paper we provide evidence that contradicts this finding. We show that the perceived decline may well be due to shifts in regulatory policy and monetary policy that have been omitted from the research. In developing the monetary policy implications, it is promising that much of the research approaches the policy problem through the framework of monetary policy rules, as uncertainty in the equilibrium real rate is not a reason to abandon rules in favor of discretion. But the results are still inconclusive and too uncertain to incorporate into policy rules in the ways that have been suggested.
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Metadaten
Author:John B. Taylor, Volker Wieland
URN:urn:nbn:de:hebis:30:3-402045
URL:http://www.imfs-frankfurt.de/fileadmin/user_upload/IMFS_WP/IMFS_WP_103.pdf
Parent Title (English):Working paper series / Institute for Monetary and Financial Stability ; 103
Series (Serial Number):Working Paper Series : Institute for Monetary and Financial Stability (103)
Publisher:Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Year of Completion:2016
Year of first Publication:2016
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2016/05/24
Edition:April 2016
Pagenumber:23
Note:
This paper is based in part on results presented at the NABE Panel “The Equilibrium Real Interest Rate—Theory, Measurement, and Use in Monetary Policy” organized by George Kahn at the ASSA meeting in San Francisco on January 3, 2016.
HeBIS PPN:381320308
Institutes:Wirtschaftswissenschaften
Institute for Monetary and Financial Stability (IMFS)
Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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