Document Type
Discussion Paper
Publication Date
4-1-2001
CFDP Number
1298
CFDP Revision Date
2003-06-01
CFDP Pages
29
Abstract
This paper examines various interest rate rules, as well as policies derived by solving optimal control problems, for their ability to dampen economic fluctuations caused by random shocks. A tax rate rule is also considered. A multicountry econometric model is used for the experiments. The results differ sharply from those obtained using recent models in which the coefficient on inflation in the nominal interest rate rule must be greater than one in order for the economy to be stable.
Recommended Citation
Fair, Ray C., "Estimates of the Effectiveness of Monetary Policy" (2001). Cowles Foundation Discussion Papers. 1552.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/1552