Taylor rule
Stanford's John Taylor on the global monetary system and central bank co-operation
The Stanford University professor talks to Daniel Hinge about how central banks can co-ordinate policy to break free from a downward spiral in interest rates
John Taylor offers way out of downward interest rate spiral
Stanford University professor says a return to more “rule-like” policy-making could help bring easing cycle to an end, with the Fed playing a key role
John Taylor and William Dudley clash on Fed strategy
Stanford professor John Taylor questions Fed’s communications; New York Fed president William Dudley sets out case against following more rules-based policy
Yellen bats away calls for simple rules-based policy
Fed chair tells Committee on Financial Services a monetary policy rule based on two economic variables is inappropriate as ‘the world is more complicated than that’
Cleveland Fed economists cautious over use of Taylor rule
Research emphasises the difficulty in measuring potential output and the natural rate of unemployment accurately and urges policy-makers to ‘take care’ when using the rule
A more effective strategy for the Fed
The Fed should adopt a Taylor-rule approach to ensure policy adjustments are only made due to changing macroeconomic fundamentals. This would mean it should raise rates and alter its communications
FOMC forward guidance adds to 'market confusion', say leading US economists
The Fed lacks 'clearly formulated' normalisation strategy, paper to be published by Central Banking argues; calls for adherence to 'disciplined inflation targeting rule'
Meltzer accuses Fed of three ‘major’ errors
Writing in the Central Banking Journal, Allan Meltzer argues the Fed continued QE for too long, while relying too heavily on ‘noisy’ data and too little on monetary and credit aggregates
Cleveland Fed researchers examine Taylor rules followed by professional forecasters
Research examines the relationship between private forecasters’ projections for inflation, unemployment and the federal funds rate; finds ‘tremendous’ differences
BoE’s Weale posits method of overcoming uncertainty
MPC member says studying rates of change can help overcome uncertainty about spare capacity and the natural rate of interest when setting policy
Plosser wants Fed to follow ‘rule-like’ monetary policy
Philadelphia Fed president says constrained discretion has been shown to produce better policy-making, citing Nobel prize-winning research
John Taylor calls for international policy co-ordination
Paper published today by the BIS says recent unusual monetary policies have been appropriate and benign - and international co-ordination could lead to an international co-operative equilibrium
Belgian paper posits method for robust optimal monetary policy
Working paper suggests way of supplementing optimal monetary policy with elements of a rules-based policy, punishing policy-makers for deviation but not preventing them from exercising discretion
G-20 inflation measure paves way for co-ordinating policy
New statistic aims to fill ‘data gap' identified in wake of the global financial crisis; follows growing calls for globally coordinated monetary policy as countries fret over effects of QE
BoE research warns of self-fulfilling prophecy in 'speed-limit’ monetary policy
Working paper says targeting rates of change may not be as beneficial as some studies have suggested; could cause interest rates to become ‘pinned’ at the zero lower bound
Taylor challenges efficacy of central bank independence
Without a rules-based framework central banks tend to stretch the bounds of their independence, and the results tend to be poor, John Taylor says
Belgian paper finds Fed policy influenced by Taylor rule
Working paper presents evidence that Federal Reserve policy-makers are influenced by the Taylor rule when making monetary policy decisions
IMF paper on optimal monetary policy frameworks under price distortions
Fund study shows sectoral inflation targeting and output gap stabilisation outperform strict headline inflation targeting in the presence of subsidised prices for goods
Exogenous financial shocks should factor into monetary policy: Dallas Fed paper
Dallas Federal Reserve study says exogenous financial shocks should be incorporated into monetary policy decisions
BoJ study on adoption of spread-adjusted Taylor rule
Bank of Japan study lends support to use of spread-adjusted Taylor rules as suitable response to adverse macroeconomic shocks
Fed’s Lockhart recommends renewed focus on monetary, credit aggregates
Atlanta Fed president also advocates Taylor-type rule to manage exit
Kansas City Fed paper on search frictions in monetary policy
Kansas City Federal Reserve paper finds evidence of indeterminacy in monetary policy in models with labour markets search frictions
Taylor calls on Fed to focus on price stability, not employment
Economist John Taylor likens Federal Reserve’s quantitative easing programme to fiscal policy; says central bank should focus on single price stability mandate
Fed’s Bullard calls for further QE
St Louis Federal Reserve president James Bullard says United States must commit to further stimulus if it wants to avoid a deflationary trap like Japan