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Do Forecasters Agree on a Taylor Rule?

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Abstract

Forecasters? projections of interest rates vary a great deal. We use a Taylor rule to investigate two possible reasons why. Namely, do differences arise because forecasters have different projections for output growth or inflation, or do they arise because forecasters follow different guidelines to predict what the Federal Reserve will do with the federal funds rate? We find evidence for both explanations. Forecasters appear to use very different projections for inflation and output growth, but they also seem to use dramatically different Taylor rule coefficients.

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  • Charles T. Carlstrom & Margaret M. Jacobson, 2015. "Do Forecasters Agree on a Taylor Rule?," Economic Commentary, Federal Reserve Bank of Cleveland, issue September.
    • Handle: RePEc:fip:fedcec:00039
    DOI: 10.26509/frbc-ec-201510
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Connect the Dots
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2016-03-07 18:39:24

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    Cited by:

    1. Feroli, Michael & Greenlaw, David & Hooper, Peter & Mishkin, Frederic S. & Sufi, Amir, 2017. "Language after liftoff: Fed communication away from the zero lower bound," Research in Economics, Elsevier, vol. 71(3), pages 452-490.
    2. George A. Kahn & Andrew Palmer, 2016. "Monetary Policy at the Zero Lower Bound: Revelations from the FOMC's Summary of Economic Projections," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 5-37.
    3. Ruttachai Seelajaroen & Pornanong Budsaratragoon & Boonlert Jitmaneeroj, 2020. "Do monetary policy transparency and central bank communication reduce interest rate disagreement?," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 39(3), pages 368-393, April.
    4. Mikhail V. Oet & Kalle Lyytinen, 2017. "Does Financial Stability Matter to the Fed in Setting US Monetary Policy?," Review of Finance, European Finance Association, vol. 21(1), pages 389-432.
    5. Dietrich, Diemo & Shin, Jong Kook & Tvede, Mich, 2020. "Debt constraints and monetary policy," Journal of Mathematical Economics, Elsevier, vol. 87(C), pages 31-42.

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