This paper examines what we have learned about monetary policy strategy and considers how we should change our thinking in this regard in the aftermath of the 2007-09 financial crisis. It starts with a discussion of where the science of monetary policy stood before the crisis and how central banks viewed monetary policy strategy. It then examines how the crisis has changed the thinking of both ...

This paper provides an overview of economic developments and the conduct of monetary policy in interwar Japan, while considering the relationships of these fluctuations and policies to changes in the monetary regime. To this end, monetary policies under the respective monetary regimes are discussed by using the Taylor Rule, which has recently been widely applied to evaluations of monetary polic...

We use two different nonparametric methods to determine whether there were multiple regimes in U.S. monetary policy over the period 1955—2003. We model monetary policy using two different versions of Taylor’s rule for the nominal interest rate target. By contrast with parametric tests for regime changes, the nonparametric methods we use allow the data to determine the dimensions on which to spl...

Yes. To the extent that monetary policy is assumed to react to asset prices, this reaction is usually assumed to be linear. This paper o¤ers a new perspective. I augment the model of Rigobon and Sack (2003) to allow for asymmetric reactions to stock price changes. I then demonstrate that the Federal Reserve has been following an asymmetric monetary policy rule over the period 19982008. While a ...

a r t i c l e i n f o JEL classification: E31 E44 E52 Keywords: Monetary policy rule Nonlinear model Stock market Structural break Time-varying coefficient This paper introduces nonlinearity and a structural break to the US forward-looking Taylor rule with a stock price gap, thereby alleviating the robustness problem that the linear Taylor rule is sensitive to minor changes of the sample period...

We study the effects of monetary policy surprises on stock returns under low and high uncertainty in U.S. using Panel Smooth Transition Regression (PSTR) model to identify regimes. Monetary are unexpected changes Federal Funds Rate (FFR) Open Market Committee (FOMC) announcement days, where mimicking portfolio method is used obtain a regular time series with since announcements occur an irregul...

This paper argues that the primary objective of monetary policy should be long run price stability or at least a low average rate of in°ation. But there is also a welfare improving role for monetary policy in helping the economy adjust to nonpolicy shocks. This gives rise to a fundamental tension in the conduct of monetary policy. Understanding this tension is central to interpreting the qualit...