Determinacy and Identification with Taylor Rules

• 成果类型: Article
• 署名作者: Cochrane, John H.
• 署名单位: University of Chicago
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/660817
• 发表日期: 2011
• 页码: 565-615
• 关键词: monetary-policy rules; PRICE-LEVEL DETERMINACY; rational-expectations; money

摘要

The new-Keynesian, Taylor rule theory of inflation determination relies on explosive dynamics. By raising interest rates in response to inflation, the Fed induces ever-larger inflation, unless inflation jumps to one particular value on each date. However, economics does not rule out explosive inflation, so inflation remains indeterminate. Attempts to fix this problem assume that the government will choose to blow up the economy if alternative equilibria emerge, by following policies we usually consider impossible. The Taylor rule is not identified without unrealistic assumptions. Thus, Taylor rule regressions do not show that the Fed moved from passive to active policy in 1980.