DP7555 Estimated Interest Rate Rules: Do they Determine Determinacy Properties?
|Publication Date:||November 2009|
|Keyword(s):||Equilibrium determinacy, Estimated Taylor rules, Interest rate rules, Monetary policy, Rules vs. discretion.|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=7555|
No. I demonstrate that econometric estimations of nominal interest rate rules may tell little, if anything, about an economy's determinacy properties. In particular, correct inference about the interest-rate response to inflation provides no information about determinacy. Instead, it could reveal whether optimal monetary policymaking is performed under discretion or commitment.