Discussion paper

DP7555 Estimated Interest Rate Rules: Do they Determine Determinacy Properties?

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.

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Citation

Jensen, H (2009), ‘DP7555 Estimated Interest Rate Rules: Do they Determine Determinacy Properties?‘, CEPR Discussion Paper No. 7555. CEPR Press, Paris & London. https://cepr.org/publications/dp7555