{
  "title": "The Use and Abuse of Taylor Rules: How Precisely Can We Estimate Them?",
  "publication": "IMF Working Papers, July 1, 2005",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/the-use-and-abuse-of-taylor-rules-how-precisely-can-we-estimate-them-18290",
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  "summary": "This paper draws attention to inconsistencies in estimating simple monetary policy rules and their implications for policy advice. We simulate a macroeconomic model with a backward reaction function similar to Taylor (1993).",
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    {
      "heading": "Summary and purpose",
      "content": "- Authors: Robert Tchaidze, Alina Carare\n- Date: July 1, 2005\n- This paper draws attention to inconsistencies in estimating simple monetary policy rules and their implications for policy advice.\n- It surveys the literature and provides a list of issues complicating practical use of Taylor rules."
    },
    {
      "heading": "Methodology",
      "content": "- Simulate a macroeconomic model with a backward reaction function similar to Taylor (1993).\n- Estimate different versions of a policy rule using the simulated data."
    },
    {
      "heading": "Key findings",
      "content": "- Under certain circumstances, estimations document an illusionary presence of a lagged interest rate.\n- Under certain circumstances, estimations document an illusionary presence of forward-looking behavior.\n- Results are consistent with the fact that several authors found very different versions of monetary policy rules, all fitting the U.S. data well.\n- The paper compiles a list of issues that complicate the practical use of Taylor rules (survey of literature)."
    },
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      "heading": "Subject coverage and keywords",
      "content": "- Subject: Inflation, Output gap, Potential output, Real interest rates, Short term interest rates\n- Keywords: central bank, interest rate, monetary policy, WP\n\n---\n\n Content in this bundle\n\n- Wp05148\n  - Wp05148 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp05148 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-use-and-abuse-of-taylor-rules-how-precisely-can-we-estimate-them-18290"
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    "Authors: Robert Tchaidze, Alina Carare",
    "Published: July 1, 2005",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451861679.001",
    "Authors: Robert Tchaidze, Alina Carare",
    "Date: July 1, 2005",
    "This paper draws attention to inconsistencies in estimating simple monetary policy rules and their implications for policy advice.",
    "It surveys the literature and provides a list of issues complicating practical use of Taylor rules.",
    "Simulate a macroeconomic model with a backward reaction function similar to Taylor (1993).",
    "Estimate different versions of a policy rule using the simulated data.",
    "Under certain circumstances, estimations document an illusionary presence of a lagged interest rate.",
    "Under certain circumstances, estimations document an illusionary presence of forward-looking behavior.",
    "Results are consistent with the fact that several authors found very different versions of monetary policy rules, all fitting the U.S. data well.",
    "The paper compiles a list of issues that complicate the practical use of Taylor rules (survey of literature).",
    "Subject: Inflation, Output gap, Potential output, Real interest rates, Short term interest rates",
    "Keywords: central bank, interest rate, monetary policy, WP",
    "**Wp05148**"
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