Taylor Rules and Monetary Policy: A Global 'Great Deviation'?

13 Pages Posted: 24 Jan 2013

See all articles by Boris Hofmann

Boris Hofmann

Bank for International Settlements (BIS) - Monetary and Economic Department

Bilyana Bogdanova

Bank for International Settlements (BIS) - Monetary and Economic Department

Date Written: September 1, 2012

Abstract

Policy rates have on aggregate been below the levels implied by the Taylor rule for most of the period since the early 2000s in both advanced and emerging market economies. This finding suggests that monetary policy has probably been systematically accommodative for most of the past decade. The deviation may, however, in part also reflect lower levels of equilibrium real interest rates that might introduce an upward bias in the traditional Taylor rule.

JEL Classification: E43, E52, E58

Suggested Citation

Hofmann, Boris and Bogdanova, Bilyana, Taylor Rules and Monetary Policy: A Global 'Great Deviation'? (September 1, 2012). BIS Quarterly Review September 2012, Available at SSRN: https://ssrn.com/abstract=2206331

Boris Hofmann (Contact Author)

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

Bilyana Bogdanova

Bank for International Settlements (BIS) - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

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