Taylor-Type Rules and Total Factor Productivity
This paper examines the impact of a persistent shock to the growth rate of total factor productivity in a New Keynesian model in which the central bank does not observe the shock. The authors then investigate the performance of alternative policy rules in such an incomplete information environment....
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| Veröffentlicht in: | Review 2012-01, Vol.94 (1), p.41-64A |
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| creator | Gavin, William T Keen, Benjamin D Pakko, Michael R |
| description | This paper examines the impact of a persistent shock to the growth rate of total factor productivity in a New Keynesian model in which the central bank does not observe the shock. The authors then investigate the performance of alternative policy rules in such an incomplete information environment. While some rules perform better than others, the authors demonstrate that inflation is more stable after a persistent productivity shock when monetary policy targets the output growth rate (not the output gap) or the price-level path (not the inflation rate). Both the output growth and price-level path rules generate less volatility in output and inflation following a persistent productivity shock compared with the Taylor rule. Reprinted by permission of the Federal Reserve Bank of St. Louis |
| doi_str_mv | 10.20955/r.94.41-64 |
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The authors then investigate the performance of alternative policy rules in such an incomplete information environment. While some rules perform better than others, the authors demonstrate that inflation is more stable after a persistent productivity shock when monetary policy targets the output growth rate (not the output gap) or the price-level path (not the inflation rate). Both the output growth and price-level path rules generate less volatility in output and inflation following a persistent productivity shock compared with the Taylor rule. Reprinted by permission of the Federal Reserve Bank of St. Louis</description><identifier>ISSN: 0014-9187</identifier><identifier>EISSN: 2163-4505</identifier><identifier>DOI: 10.20955/r.94.41-64</identifier><identifier>CODEN: FRBRDV</identifier><language>eng</language><publisher>St. Louis: Federal Reserve Bank of St. Louis</publisher><subject>Central banks ; Consumption ; Costs ; Economic aspects ; Economic theory ; Estimates ; Federal funding ; Federal funds rate ; Federal Reserve monetary policy ; Forecasts and trends ; GDP ; Gross Domestic Product ; Growth rate ; Households ; Industrial productivity ; Inflation ; Inflation (Finance) ; Inflation controls ; Inflation rate ; Inflation rates ; Interest rates ; Investments ; Keynesian theory ; Laws, regulations and rules ; Leisure ; Monetary policy ; Output gap ; Output rate ; Price level ; Prices ; Production functions ; Productivity ; Sticky prices ; Sticky wages ; Studies ; Supply shock ; Taylor rule ; Total factor productivity ; Trends ; U.S.A ; United States ; Utility functions ; Volatility</subject><ispartof>Review, 2012-01, Vol.94 (1), p.41-64A</ispartof><rights>COPYRIGHT 2012 Federal Reserve Bank of St. Louis</rights><rights>Copyright Federal Reserve Bank of St. Louis Jan/Feb 2012</rights><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>312,314,776,780,787,27841,27901,27902</link.rule.ids></links><search><creatorcontrib>Gavin, William T</creatorcontrib><creatorcontrib>Keen, Benjamin D</creatorcontrib><creatorcontrib>Pakko, Michael R</creatorcontrib><title>Taylor-Type Rules and Total Factor Productivity</title><title>Review</title><description>This paper examines the impact of a persistent shock to the growth rate of total factor productivity in a New Keynesian model in which the central bank does not observe the shock. The authors then investigate the performance of alternative policy rules in such an incomplete information environment. While some rules perform better than others, the authors demonstrate that inflation is more stable after a persistent productivity shock when monetary policy targets the output growth rate (not the output gap) or the price-level path (not the inflation rate). Both the output growth and price-level path rules generate less volatility in output and inflation following a persistent productivity shock compared with the Taylor rule. 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gap</subject><subject>Output rate</subject><subject>Price level</subject><subject>Prices</subject><subject>Production functions</subject><subject>Productivity</subject><subject>Sticky prices</subject><subject>Sticky wages</subject><subject>Studies</subject><subject>Supply shock</subject><subject>Taylor rule</subject><subject>Total factor productivity</subject><subject>Trends</subject><subject>U.S.A</subject><subject>United States</subject><subject>Utility 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| ispartof | Review, 2012-01, Vol.94 (1), p.41-64A |
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| source | PAIS Index; EZB-FREE-00999 freely available EZB journals; EBSCOhost Business Source Complete |
| subjects | Central banks Consumption Costs Economic aspects Economic theory Estimates Federal funding Federal funds rate Federal Reserve monetary policy Forecasts and trends GDP Gross Domestic Product Growth rate Households Industrial productivity Inflation Inflation (Finance) Inflation controls Inflation rate Inflation rates Interest rates Investments Keynesian theory Laws, regulations and rules Leisure Monetary policy Output gap Output rate Price level Prices Production functions Productivity Sticky prices Sticky wages Studies Supply shock Taylor rule Total factor productivity Trends U.S.A United States Utility functions Volatility |
| title | Taylor-Type Rules and Total Factor Productivity |
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