The Taylor Rule and the Transformation of Monetary Policy
George A. Kahn
Federal Reserve Bank of Kansas City
Pier Francesco Asso
University of Palermo
This paper examines the intellectual history of the Taylor Rule and its considerable influence on macroeconomic research and monetary policy. The paper traces the historical antecedents to the Taylor rule, emphasizing the contributions of three prominent advocates of rules - Henry Simons, A.W. H. Phillips, and Milton Friedman. The paper then examines the evolution of John Taylor's thinking as an academic and policy advisor leading up to his formulation of the Taylor rule. Finally, the paper documents the influence of the Taylor rule on macroeconomic research and the Federal Reserve's conduct of monetary policy.
Number of Pages in PDF File: 41
Keywords: Taylor rule, monetary policy, rules versus discretion
JEL Classification: B22, B31, E52
Date posted: January 31, 2008
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