## Dissecting Taylor Rules in a Structural VAR

_IMF Working Papers, January 1, 2010_

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## Bibliographic details
- Authors: Woon Gyu Choi, Yi Wen
- Published: January 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451962291.001

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### Summary
- The paper uncovers Taylor rules from estimated monetary policy reactions using a structural VAR on U.S. data from 1959 to 2009.
- These Taylor rules reveal the dynamic nature of policy responses to different structural shocks.
- The authors find that U.S. monetary policy has been far more responsive over time to demand shocks than to supply shocks, and more aggressive toward inflation than output growth.
- The estimated dynamic policy coefficients characterize the style of policy as a "bang-bang" control for the pre-1979 period and as a gradual control for the post-1979 period.

### Methodology
- Approach: Structural VAR applied to U.S. data.
- Sample period: 1959 to 2009.
- Key technical elements mentioned: spectral decomposition, structural VAR, dynamic policy coefficients.
- Focus variables and concepts: Taylor rule, central bank policy rate, GDP deflator, inflation, output growth, supply shocks, endogenous monetary policy.

### Key Findings and Results
- Monetary policy responsiveness:
  - Far more responsive over time to demand shocks than to supply shocks.
  - More aggressive toward inflation than output growth.
- Policy style over time:
  - Pre-1979: characterized as "bang-bang" control.
  - Post-1979: characterized as gradual control.
- Subject areas covered include: Business cycles; Central bank policy rate; Economic growth; Economic theory; Financial services; Inflation; Prices; Production; Production growth; Supply shocks.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/dissecting-taylor-rules-in-a-structural-var-23571_