This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research

Volume Title: Monetary Policy Rules

Volume Author/Editor: John B. Taylor, editor

Volume Publisher: University of Chicago Press

Volume ISBN: 0-226-79124-6

Volume URL: http://www.nber.org/books/tayl99-1

Publication Date: January 1999

Chapter Title: Front matter "Monetary Policy Rules"

Chapter Author: John B. Taylor

Chapter URL: http://www.nber.org/chapters/c7411

Chapter pages in book: (p. -12 - 0)

This Page Intentionally Left Blank Monetary Policy Rules A National Bureau of Economic Research Conference Report Studies in Business Cycles Volume 31

National Bureau of Economic Research Conference on Research in Business Cycles The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London 0 1999 by the National Bureau of Economic Research All rights reserved. Published 1999 Paperback edition 2001 10 09 08 07 06 05 04 03 02 01 2 3 4 5 6 ISBN: 0-226-79124-6 (cloth) ISBN: 0-226-79125-4 (paperback)

Library of Congress Cataloging-in-Publication Data

Monetary policy rules / edited by John B. Taylor. P bk. ed. p. cm.-(Studies in Business cycles; v. 31) Papers based on the National Bureau of Economic Research Conference on Research in Business Cycles, held at Standford University, 1998. Includes bibliographical references and indexes. ISBN 0-226-79125-4 1. Monetary policy-Econometric models-Congresses. 2. Monetary policy-United States-Econometric models- Congresses. I. Taylor, John B. 11. National Bureau of Economic Research Conference on Research in Business Cycles (1998 : Stanford University 111. Studies in business cycles ; no. 3 1. HG230.5.M66 2001 332.4’6-dc21 00-069072 CIP

@The paper used in this publication meets the minimum requirements of the American National Standard for Information Sciences-Permanence of Paper for Printed Library Materials, ANSI 239.48-1992 National Bureau of Economic Research

Officers John H. Biggs, chairman Sam Parker, chieffinancial oficer Carl F. Christ, vice-chairman Susan Colligan, corporate secretary Martin Feldstein, president and chief Kelly Horak, controller and assistant executive oflcer corporate secretary Robert Mednick. treasurer Gerardine Johnson, assistant corporate secretaly

Directors at Large Peter C. Aldrich George C. Eads Michael H. Moskow Elizabeth E. Bailey Martin Feldstein Rudolph A. Oswald John H. Biggs Stephen Friedman Robert T. Parry Andrew Brimmer George Hatsopoulos Peter G. Peterson Carl F. Christ Karen N. Horn Richard N. Rosett Don R. Conlan John Lipsky Kathleen P. Utgoff Kathleen B. Cooper Leo Melamed Marina v.N. Whitman

Directors by University Appointment George Akerlof, California, Berkeley Joel Mokyr, Northwestern Jagdish Bhagwati, Columbia Andrew Postlewaite, Pennsylvania William C. Brainard, Yule Nathan Rosenberg, Stanford Glen G. Cain, Wisconsin Harold T. Shapiro, Princeton Franklin Fisher, Massachusetts Institute Craig Swan, Minnesota of Technology David B. Yoffie, Harvard Saul H. Hymans, Michigan Arnold Zellner, Chicago Marjorie B. McElroy, Duke

Directors by Appointment of Other Organizations Marcel Boyer, Canadian Economics Robert Mednick, American Institute Association of Certijied Public Accountants Mark Drabenstott, American Agricultural John J. Siegfried, American Economic Economics Association Association William C. Dunkelberg, National Association David A. Smith, American Federation of of Business Economists Labor and Congress of Industrial Gail D. Fosler, The Conference Board Organizations A. Ronald Gallant, American Statistical Josh S. Weston, Committee for Economic Association Development Robert S. Hamada, American Finance Gavin Wright, Economic Histoly Association Association

Directors Emeriti Moses Abramovitz Franklin A. Lindsay Bert Seidman George T. Conklin, Jr. Paul W. McCracken Eli Shapiro Thomas D. Flynn Geoffrey H. Moore Lawrence R. Klein James J. O’Leary

Since this volume is a record of conference proceedings, it has been exempted from the rules governing critical review of manuscripts by the Board of Directors of the National Bureau (resolution adopted 8 June 1948, as revised 21 November 1949 and 20 April 1968). This Page Intentionally Left Blank Contents

Acknowledgments ix Introduction 1 John B. Taylor 1. Performance of Operational Policy Rules in an Estimated Semiclassical Structural Model 15 Bennett T. McCallum and Edward Nelson Comment: Mark Gertler Discussion Summary 2. Interest Rate Rules in an Estimated Sticky Price Model 57 Julio J. Rotemberg and Michael Woodford Comment: Martin Feldstein Discussion Summary 3. Policy Rules for Open Economies 127 Laurence Ball Comment: Thomas J. Sargent Discussion Summary 4. Forward-Looking Rules for Monetary Policy 157 Nicoletta Batini and Andrew G. Haldane Comment: Donald L. Kohn Discussion Summary 5. Policy Rules for Inflation Targeting 203 Glenn D. Rudebusch and Lars E. 0. Svensson Comment: Frederic S. Mishkin Comment: James H. Stock Discussion Summary vii viii Contents

6. Robustness of Simple Monetary Policy Rules under Model Uncertainty 263 Andrew Levin, Volker Wieland, and John C. Williams Comment: Lawrence J. Christian0 and Christopher J. Gust Discussion Summary A Historical Analysis of Monetary Policy Rules 319 John B. Taylor Comment: Richard H. Clarida Discussion Summary What Should the Monetary Authority Do When Prices Are Sticky? 349 Robert G. King and Alexander L. Wolman Comment: Benjamin M. Friedman Discussion Summary 9. Rethinking the Role of NAIRU in Monetary Policy: Implications of Model Formulation and Uncertainty 405 Arturo Estrella and Frederic S. Mishlun Comment: Robert E. Hall Discussion Summary Contributors 437 Author Index 439 Subject Index 443 Acknowledgments

In addition to all the people who did the economic research, wrote the papers for the volume, commented on papers, participated in the discussion at the conference where the papers were presented, and worked behind the scenes at the National Bureau of Economic Research, I would like to express particular thanks to Martin Feldstein for suggesting that I organize a conference on mon- etary policy rules and for providing the encouragement and financial support to make sure it happened, to Monika Piazzesi for preparing a very useful sum- mary of the fascinating discussion that took place at the conference, to Kirsten Foss Davis and Rob Shannon for the logistical support that made the confer- ence enjoyable and productive, to Jean Koentop for managing the manuscript here at Stanford as the papers and the discussion summaries were reviewed, to Christina Romer for providing a helpful and timely review of the entire manuscript, and to the students in Economics 234 at Stanford University in the spring quarter of 1998, where many of the papers in the volume were analyzed and discussed in detail.

John B. Taylor

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