Date of Award
2016
Document Type
Thesis
Degree Name
Bachelors
Department
Social Sciences
First Advisor
Khemraj, Tarron
Keywords
Economics, Taylor Rule, Models, Inflation
Area of Concentration
Economics
Abstract
This study seeks to determine how the variables of the classic Taylor Rule, the inflation gap and the output gap, perform from 1970 to 2014 by estimating an ARDL model for each Federal Reserve chairman over this period. The findings revealed that the variables are poor indicators of monetary policy after the ending of the Volcker period. During the Greenspan and Bernanke periods, the study found that the long-run equilibrium relationship present between the federal funds rate, the output gap, and the inflation gap dissipates. Further, the model faces misspecification as a byproduct of omitted variables during the Bernanke period. This displays the inability of the Taylor Rule variables to mirror modern policy making.
Recommended Citation
Bourdon, Reed, "A CHAIRMAN BY CHAIRMAN ANALYSIS OF A DYNAMIC TAYLOR RULE: DOES THE CLASSIC MODEL STAND THE TIMES?" (2016). Theses & ETDs. 5164.
https://digitalcommons.ncf.edu/theses_etds/5164