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Historical monetary policy analysis and the Taylor rule

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Orphanides, Athanasios·2003·Journal of Monetary Economics
DOI 10.1016/s0304-3932(03)00065-5
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Abstract

This study examines the usefulness of the Taylor-rule framework as an organizing device for describing the policy debate and evolution of monetary policy in the United States. Monetary policy during the 1920s and since the 1951 Treasury-Federal Reserve Accord can be broadly interpreted in terms of this framework with rather surprising consistency. In broad terms, during these periods policy has been generally formulated in a forward-looking manner with price stability and economic stability serving as implicit or explicit guides. As early as the 1920s, measures of real economic activity relative to "normal" or "potential" supply appear to have influenced policy analysis and deliberations. Confidence in such measures as guides for activist monetary policy proved counterproductive at times, resulting in excessive activism, such as during the Great Inflation and at the brink of the Great Depression. Policy during the past two decades is broadly consistent with natural-growth targeting variants of the Taylor rule that exhibit less activism.

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Metadata

Authors
Orphanides, A.
Venue
Journal of Monetary Economics
Publisher
Elsevier BV
Published
2003-07
Volume
50
Issue
5
Pages
983-1022
ISSN
0304-3932 (ISSN-L)
DOI
10.1016/s0304-3932(03)00065-5
OpenAlex
W2167359167
Cited by
412
References
2
FWCI
39.15
Type
journal article
Language
en
Open access
green
Licence
www.elsevier.com/tdm/userlicense/1.0/ (tdm)

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Orphanides, A. (2003). Historical monetary policy analysis and the Taylor rule. Journal of Monetary Economics. https://doi.org/10.1016/s0304-3932(03)00065-5

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