This work empirically evaluates the Taylor rule for the US and Brazil using Markov-Switching
Regimes. I find that the inflation parameter of the US Taylor rule is less than one in many
periods, contrasting heavily with Clarida, Gal´ı and Gertler (2000), and the same happens with
Brazilian data. When the inflation parameter is greater than one, it encompasses periods that
these authors considered they should be less than one. Brazil is used for comparative purposes
because it experienced a high level inflation until 1994 and then a major stabilization plan
reduced the growth in prices to civilized levels. Thus, it is a natural laboratory to test theories
designed to work in any environment. The findings point to a theoretical gap that deserves
further investigation and show that monetary policy in Brazil has been ineffective, which is
coherent with the general attitude of population in relation to this measure
Is data on this page outdated, violates copyrights or anything else? Report the problem now and we will take corresponding actions after reviewing your request.