Evaluating McCallum's rule when monetary policy matters

Article Abstract:

An evaluation of McCallum's rule in setting monetary policy, based on the growth of the nominal GDP using the monetary base as the instrument, showed that the model would respond better in various economic environments were the monitoring feedback based on the growth rate of the nominal GDP. McCallum's rule was evaluated against the Keynesian, Reduced-Form and Structural VAR models and was shown to be weak in replicating the actual first and second moments of data. McCallum's rule works better in conjunction with the Federal Reserve's reaction function.

Economic Programs, Administration of Economic Programs, Evaluation, Measurement, Economic policy, Economic research, Gross domestic product, Economic indicators

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Dynamic implications of chaotic monetary policy

Article Abstract:

Chaotic monetary policy is discussed through a macroeconomic model characterized by insufficient information and nonlinearity. Results indicate that chaos in the money supply affects trends in prices, nominal interest rate and inflation. However, real variables such as real interest rate and aggregate output do not exhibit any responding effect. In another vein, the shaping of a rational expectation function in a dynamic model with an existing chaos variable is seen to be difficult.

Chaos theory, Chaotic systems, Rational expectations (Economics)

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Do shifts in federal reserve policy regimes explain interest rate anomalies?

Article Abstract:

The impact of Federal Reserve Board's monetary policies on interest rate behavior is investigated. Specifically, the non-correlation between the changes in the Federal Reserve's operating procedures to control 'errant money growth' and unusual interest rate movements is confirmed. The changes, which were enforced between Oct. 1979 and Oct. 1982, cannot be held responsible for triggering the anomalies because started occurring prior to Oct. 1979 and even after Oct. 1982.

Influence, United States. Federal Reserve Board, Macroeconomics

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