Perhaps the FOMC Did What it Said it Did: An Alternative Interpretation of the Great Inflation

Kozicki, Sharon; Tinsley, Peter

doi:10.2139/ssrn.850606

Cited by 6 publications

(6 citation statements)

References 47 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The estimation methodology is also discussed in the appendix of Kozicki and Tinsley (2007) 7 Following Ravn and Uhlig (2002), the Hodrick-Prescott smoothing parameter is 2 4 x 1600 = 25, 600, as the FOMC has met at least eight times a year during the sample used.…”

Section: A Framework For Estimating Policy Rate Responsesmentioning

confidence: 99%

Perhaps the 1970s FOMC did what it said it did

Kozicki

Tinsley

2009

Journal of Monetary Economics

Self Cite

View full text Add to dashboard Cite

Abstract:Briefing forecasts prepared for the Federal Open Market Committee (FOMC) are used to estimate changes in the design of U.S. monetary policy and in the implied policy target for inflation from 1970 through 1997. Both estimated policy rate responses and FOMC transcripts are consistent with intermediate targeting of monetary aggregates throughout the Great Inflation of the 1970s. The unpublished FOMC targets for M1 growth are tabulated. Empirical results support an effective inflation target of roughly 7 percent in the 1970s and 3 percent thereafter. A notable difference in the 1970s monetary policies of the US and Germany is the absence of explicit public objectives for US long-run inflation.

show abstract

Section: A Framework For Estimating Policy Rate Responsesmentioning

confidence: 99%

Perhaps the 1970s FOMC did what it said it did

Kozicki

Tinsley

2009

Journal of Monetary Economics

Self Cite

View full text Add to dashboard Cite

show abstract

“…If the equilibrium interest rate was high, perhaps it is because the central bank's implicit target for inflation was low. To investigate this possibility, I adopt the approach of Kozicki and Tinsley (2007) to derive an implicit inflation target. Starting from , and setting i = 0, 1, combine it with a dynamic adjustment of the interest rate modelled as where is the equilibrium real interest rate, and all other terms are previously defined.…”

Section: Empirical Evidencementioning

confidence: 99%

Revisiting the Coyne Affair: a singular event that changed the course of Canadian monetary history

Siklos

2010

Canadian J of Economics

View full text Add to dashboard Cite

The Coyne Affair occurred during the 1959-61 period and led to the resignation of the governor. Eventually major reforms of the Bank of Canada Act were enacted. Archival and empirical evidence is used to assess the performance of monetary policy throughout the 1950s. In doing so, a real-time data set is constructed for both Canada and the US that permits the estimation of a reaction function. I find that while the case against James Coyne is 'not proven,' there was a brief period when monetary policy was excessively tight, and this may well have worsened an already weak economic environment. JEL classification: N100, E52, E58, C52Un autre coup d'oeilà l'affaire Coyne : unévénement singulier qui a changé le cours de l'histoire monétaire canadienne. L'affaire Coyne a eu lieu au cours de la période 1959-61 et a conduità la démission du Gouverneur de la Banque du Canada.Éventuellement, des réformes majeuresà la Loi sur la Banque du Canada ontété mises en oeuvre. On utilise des documents d'archives et des résultats empiriques pourévaluer la performance de la politique monétaire dans les années 1950. Ce faisant, on construit une base de données en temps réel pour le Canada et lesÉtats-Unis qui permet de faire l'estimation d'une fonction de réaction. On découvre que même si l'argumentation développée contre Coyne n'est pas prouvée, il y a eu une courte période durant laquelle la politique monétaire aété excessivement restrictive et que cela peut fort bien avoir entrainé la détérioration d'uné economie déjà affaiblie.

show abstract

“…The unemployment rate appears to be an appropriate summary measure of real activity because, as discussed in Kozicki and Tinsley (2007), it seems likely that the FOMC used aggregate unemployment as a measure of resource slack. Moreover, the change in the unemployment rate provides a proxy for economic growth.…”

Section: Empirical Responses Of Forward Ratesmentioning

confidence: 99%

“…Clarida, Gali, and Gertler (2000), Lubik and Schorfheide (2004), and Kozicki and Tinsley (2007) provide empirical evidence that in the period before Paul Volcker was appointed Chairman of the Federal Open Market Committee (FOMC) of the Federal Reserve, 4 nominal policy rates exhibited a passive, or inelastic, response (i.e., less than one-for-one) with respect to inflation. However, in the broader context of bond rate transmission, it seems important to consider also the responsiveness of bond rates to inflation.…”

Section: Introductionmentioning

confidence: 99%

Term structure transmission of monetary policy

Kozicki¹,

Tinsley²

2008

The North American Journal of Economics and Finance

Self Cite

View full text Add to dashboard Cite

Abstract:Under bond rate transmission of monetary policy, standard restrictions on policy responses to obtain determinate inflation need not apply. In periods of passive policy, bond rates may exhibit stable responses to inflation if future policy is anticipated to be active, or if time-varying term premiums incorporate inflation-dependent risk pricing. We derive a generalized Taylor Principle that requires a lower bound to the average anticipated path of forward rate responses to inflation. We also present a no-arbitrage term structure model with horizon-dependent policy and time-varying term premiums to explain mechanics and provide empirical results supporting these channels.

show abstract

Perhaps the FOMC Did What it Said it Did: An Alternative Interpretation of the Great Inflation

Cited by 6 publications

References 47 publications

Perhaps the 1970s FOMC did what it said it did

Perhaps the 1970s FOMC did what it said it did

Revisiting the Coyne Affair: a singular event that changed the course of Canadian monetary history

Term structure transmission of monetary policy

Contact Info

Product

Resources

About