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A comparison of equilibrium under alternative monetary policy rules

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  • Ali K. Malik

Abstract

We evaluate the Taylor rule and the nominal income-targeting rule at alternative horizons, along the dimension of determinacy and E-stability of the rational expectations equilibrium. We use the New Keynesian model frequently used as a benchmark model for the evaluation of alternative monetary policy rules in the recent literature, for this purpose. Evaluating the two policy rules along this dimension, our results clearly prefer the Taylor rule over the nominal income-targeting rule.

Suggested Citation

  • Ali K. Malik, 2012. "A comparison of equilibrium under alternative monetary policy rules," Applied Economics Letters, Taylor & Francis Journals, vol. 19(14), pages 1391-1399, September.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:14:p:1391-1399
    DOI: 10.1080/13504851.2011.631880
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    References listed on IDEAS

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    1. Bennett T. McCallum, 1999. "Recent developments in the analysis of monetary policy rules," Review, Federal Reserve Bank of St. Louis, vol. 81(Nov), pages 3-12.
    2. Bullard, James & Mitra, Kaushik, 2002. "Learning about monetary policy rules," Journal of Monetary Economics, Elsevier, vol. 49(6), pages 1105-1129, September.
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