Activist stabilization policy and inflation : the Taylor rule in the 1970s

  • A number of recent studies have suggested that activist stabilization policy rules responding to inflation and the output gap can attain simultaneously a low and stable rate of inflation as well as a high degree of economic stability. The foremost example of such a strategy is the policy rule proposed by Taylor (1993). In this paper, I demonstrate that the policy settings that would have been suggested by this rule during the 1970s, based on real-time data published by the U.S. Commerce Department, do not greatly differ from actual policy during this period. To the extent macroeconomic outcomes during this period are considered unfavorable, this raises questions regarding the usefulness of this strategy for monetary policy. To the extent the Taylor rule is believed to provide a reasonable guide to monetary policy, this finding raises questions regarding earlier critiques of monetary policy during the 1970s.

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Metadaten
Author:Athanasios OrphanidesORCiDGND
URN:urn:nbn:de:hebis:30-10050
Parent Title (English):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2002,15
Series (Serial Number):CFS working paper series (2002, 15)
Document Type:Working Paper
Language:English
Year of Completion:2002
Year of first Publication:2002
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2005/06/13
Tag:Great Inflation; Output Gap; Real-time Data; Taylor Rule
GND Keyword:USA; Geldpolitik; Taylor-Regel; Geschichte 1968-1979
Page Number:30
Source:CFS working paper ; 2002,15
HeBIS-PPN:203438728
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht