Should the Fed Regularly Evaluate its Monetary Policy Framework?

72 Pages Posted: 5 Dec 2018 Last revised: 21 Feb 2019

See all articles by Jeffrey C. Fuhrer

Jeffrey C. Fuhrer

Federal Reserve Bank of Boston; Harvard University - Harvard Kennedy School (HKS)

Giovanni Olivei

Federal Reserve Bank of Boston

Eric S. Rosengren

Federal Reserve Bank of Boston - Supervision and Regulation

Geoffrey M. B. Tootell

Federal Reserve Banks - Federal Reserve Bank of Boston

Date Written: 2018-10-01

Abstract

Would a more open and regular evaluation of the monetary policy framework improve policy in the United States? Even when considering a relatively short timeframe that spans the 1960s to the present, it is possible to point to many significant changes to the framework. Some of the changes were precipitated by acute economic conditions, while others were considered and implemented only gradually as a response to long-standing problems with the framework. But the process for evaluating and changing frameworks to date has not always been transparent, and changes have not always been timely. Could a more formal, and open, review improve how well we adhere to our current framework? Could transitions to a new framework be made more effectively? We conclude that such a review might indeed be beneficial, and outline one possible review process.

Keywords: monetary policy framework, the evolution of monetary policy, FOMC, policy rules

JEL Classification: E52, E58, E61

Suggested Citation

Fuhrer, Jeffrey C. and Olivei, Giovanni and Rosengren, Eric S. and Tootell, Geoffrey M.B., Should the Fed Regularly Evaluate its Monetary Policy Framework? (2018-10-01). FRB of Boston Working Paper No. 18-8. Available at SSRN: https://ssrn.com/abstract=3296151

Jeffrey C. Fuhrer (Contact Author)

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States
617-973-3410 (Phone)
617-973-3957 (Fax)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Giovanni Olivei

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Eric S. Rosengren

Federal Reserve Bank of Boston - Supervision and Regulation ( email )

600 Atlantic Avenue
P.O. Box 2076
Boston, MA 02210
United States
617-973-3090 (Phone)
617-973-3219 (Fax)

Geoffrey M.B. Tootell

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

600 Atlantic Avenue
Boston, MA 02210
United States
(617) 973-3430 (Phone)

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