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| Title: | | Testing the monetary policy rule in the US: A reconsideration of the Fed's behaviour  |
| Authors: | | Minford, Patrick Ou, Zhirong |
| Issue Date: | | 2009 |
| Series/Report no.: | | Cardiff Economics Working Papers E2009/19 |
| Abstract: | | We calibrate a standard New Keynesian model with three alternative representations of monetary policy- an optimal timeless rule, a Taylor rule and another with interest rate smoothing- with the aim of testing which if any can match the data according to the method of indirect inference. We find that the only model version that fails to be strongly rejected is the optimal timeless rule. Furthermore this version can also account for the widespread finding of apparent Taylor rules and interest rate smoothing in the data, even though neither represents the true monetary policy. |
| Subjects: | | Monetary policy Kew Keynesian model the target rule Taylor-type rules Bootstrap simulation VAR Indirect inference Wald statistic |
| JEL: | | E12 E17 E42 E52 E58 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Cardiff Economics Working Papers
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