Download This PaperEstimated Interest Rate Rules: Do They Determine Determinacy Properties?
23 Pages Posted: 2 Jan 2011
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Estimated Interest Rate Rules: Do They Determine Determinacy Properties?
Estimated Interest Rate Rules: Do They Determine Determinacy Properties?
Date Written: December 30, 2010
Abstract
No. I demonstrate that econometric estimations of nominal interest rate rules may tell little, if anything, about an economy's determinacy properties. In particular, correct inference about the interest-rate response to inflation provides no information about determinacy. Instead, it could reveal whether optimal monetary policymaking is performed under discretion or commitment.
Keywords: Monetary Policy, Interest Rate Rules, Estimated Taylor Rules, Equilibrium Determinacy, Rules vs. Discretion
JEL Classification: E52, E58
Suggested Citation: Suggested Citation
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