‘Bernanke targeting’ may outperform Taylor rule – Fed paper

A monetary policy rule based on temporary price-level targeting tends to outperform other options, including various specifications of the Taylor rule, a recent Federal Reserve working paper finds.

From Taylor’s Rule to Bernanke’s temporary price-level targeting, by James Hebden and David Lopez-Salido, compares John Taylor’s famous rule, which proposes guidelines for how central banks should alter interest rates in response to changes in economic conditions, with an idea put forward by former