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). We estimate different versions of a policy rule, using these simulated data.

Alina Carare

Robert Tchaidze

English

Research Papers in Economics

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The Use and Abuse of Taylor Rules: How Precisely Can We Estimate Them?

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Research Papers in Economics