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Historical performance of rule-like monetary policy

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  • Teryoshin, Yevgeniy

Abstract

I construct the differences between rule-based monetary policy for multiple interest rate rules and the actual interest rates for nine countries using real-time data available to policymakers at the time. Using structural break analysis, regressions at the country level, and panel regressions, which are robust to different measures of output and inflation, I document that more rule-like policy is associated with greater economic stability primarily though improved inflation stability. Additionally, I find evidence that the association between rule-like policy and greater economic stability is causal by examining the timing of the structural breaks and the changes in central bank policy and Granger causality testing.

Suggested Citation

  • Teryoshin, Yevgeniy, 2023. "Historical performance of rule-like monetary policy," Journal of International Money and Finance, Elsevier, vol. 130(C).
    • Handle: RePEc:eee:jimfin:v:130:y:2023:i:c:s0261560622001693
    DOI: 10.1016/j.jimonfin.2022.102766
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    More about this item

    Keywords

    Monetary policy; Rules versus discretion; Taylor rules;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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