The evolution of U.S. monetary policy: 2000–2007

Abstract

This paper estimates a VAR with time-varying parameters to characterize the changes in Federal Reserve policy that occurred from 2000 through 2007 and assess how those changes affected the performance of the U.S. economy. The results point to a gradual shift in the Fed's emphasis over this period, away from stabilizing inflation and towards stabilizing output. A persistent deviation of the federal funds rate from the settings prescribed by the estimated monetary policy rule appears more important, however, in causing inflation to overshoot its target in the years leading up to the Great Recession.JEL Codes: C32, E31, E32, E37, E52, E58.

Economic uncertainty and its impact on the Croatian economy

“…Except from the sole IRFs (posterior distribution means), they also contain its 16 th and 84 th percentile. This is in line with similar reports (Bloom, 2009;Primiceri, 2005;del Negro and Primiceri, 2015;Jurado, Ludvigson and Ng, 2015;Belongia and Ireland, 2016). That way we obtain the middle 68% of the posterior distribution, which comes down to the interval of ±1 standard error in the normal distribution case.…”

“…Besides them, we also utilize the following macroeconomic variables in VAR modelling: 3-month money market interest rate (int), real average wage index (rwage), HICP index (HICP), and the industrial production index (ind). 8 Considering the fact that Croatia is a small open economy, we also utilize the following control variables: STOXX 600 stock index (STOXX 600), oil prices (oil), euro area industrial 5 Answers "don't know" are excluded from further consideration. 6 Girardi and Reuter (2016) obtain rather standard results in comparison to the related literature.…”

“…7 For the exact wording of all BCS questions, see European Commission (2014). 8 The industrial production index is analysed as a proxy for GDP to increase the data frequency and ensure an adequate sample size. The same procedure is also used in similar studies: Bloom Source: Authors' calculations.…”

“…Having in mind that the analysed model includes a large number of parameters that are numerically challenging to estimate (equa-tions 8-12), empirical application of this model regularly include three variables at most (Primiceri, 2005;del Negro and Primiceri, 2015;Belongia and Ireland, 2016). Since it was not possible to examine the widest possible model specification, we estimated several trivariate models.…”

One Size Fits All? Monetary Policy and Asymmetric Household Debt Cycles in U.S. States

“…In addition, and although these traditional rules have described particularly well the conduct of U.S. monetary policy during the Great Moderation from the 1980s to the late‐2000s, the early 2000s, however, brought about a change in the course of monetary policy, with a standard Taylor rule prescribing a much higher policy rate. This has led some economists to deem monetary policy to have been too accommodative in the run‐up to the Great Recession (Taylor , Leamer , Belongia and Ireland , Borio, Disyatat, and Juselius ).…”