An Historical Analysis of Monetary Policy Rules

54 Pages Posted: 18 Jan 1999 Last revised: 10 Oct 2010

See all articles by John B. Taylor

John B. Taylor

Stanford University; National Bureau of Economic Research (NBER)

Date Written: October 1998


This paper examines several episodes in U.S. monetary history using the framework of an interest rate rule for monetary policy. The main finding is that a monetary policy rule in which the interest rate responds to inflation and real output more aggressively than it did in the 1960s and 1970s, or than during the time of the international gold standard, and more like the late 1980s and 1990s, is a good policy rule. Moreover, if one defines rule, then such mistakes have been associated with either high and prolonged inflation or drawn out periods of low capacity utilization.

Suggested Citation

Taylor, John B., An Historical Analysis of Monetary Policy Rules (October 1998). NBER Working Paper No. w6768, Available at SSRN:

John B. Taylor (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

National Bureau of Economic Research (NBER)

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