Regulation and the Neo-Wicksellian Approach to Monetary Policy

14 Pages Posted: 30 Jul 2007

See all articles by John V. Duca

John V. Duca

Federal Reserve Banks - Federal Reserve Bank of Dallas; Oberlin College

Date Written: 2007

Abstract

Laubach and Williams (2003) employ a Kalman filter approach to jointly estimate the neutral real federal funds rate and trend output growth using an IS relationship and an output gap based inflation equation. They find a positive link between these two variables, but also much error surrounding neutral real rate estimates. We modify their approach by including variables for regulations on deposit interest rates and on wages and prices. These variables are statistically significant and notably affect estimates of two policy relevant coefficients: the sensitivity of output to the real interest rate and that of inflation to the output gap.

Keywords: regulation, neutral real interest rate, monetary policy

JEL Classification: E50, E43, E44

Suggested Citation

Duca, John V., Regulation and the Neo-Wicksellian Approach to Monetary Policy (2007). Available at SSRN: https://ssrn.com/abstract=1003257 or http://dx.doi.org/10.2139/ssrn.1003257

John V. Duca (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Oberlin College

Oberlin, OH 44074
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
40
Abstract Views
447
PlumX Metrics