Minford, Patrick and Ou, Zhirong ![]() |
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Abstract
We calibrate a standard New Keynesian model with three alternative representations of monetary policy- an optimal timeless rule, a Taylor rule and another with interest rate smoothing- with the aim of testing which if any can match the data according to the method of indirect inference. We find that the only model version that fails to be strongly rejected is the optimal timeless rule. Furthermore this version can also account for the widespread finding of apparent ‘Taylor rules’ and ‘interest rate smoothing’ in the data, even though neither represents the true monetary policy.
Item Type: | Monograph (Working Paper) |
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Date Type: | Publication |
Status: | Published |
Schools: | Business (Including Economics) |
Subjects: | H Social Sciences > HB Economic Theory |
Publisher: | Cardiff University |
Date of First Compliant Deposit: | 30 March 2016 |
Last Modified: | 28 Oct 2022 10:19 |
URI: | https://orca.cardiff.ac.uk/id/eprint/77832 |
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