Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper
Assessing simple policy rules: a view from a complete macro model
Eric M. Leeper
Tao Zha

We explore two popular approaches to empirical analysis of monetary policy: the New Keynesian and the identified vector autoregression approaches. Stylized models of private behavior coupled with simple rules describing policy behavior characterize New Keynesian work. Vector autoregressions consist of minimally identified dynamic descriptions of private behavior coupled with a detailed rule for policy behavior. The simplicity of New Keynesian models aids in communication but leaves the models’ implications vulnerable. By relating the New Keynesian models to identified vector autoregressions, we explore the differences and similarities in the two approaches and assess some of the key conclusions to emerge from New Keynesian research.

Download Full text
Cite this item
Eric M. Leeper & Tao Zha, Assessing simple policy rules: a view from a complete macro model, Federal Reserve Bank of Atlanta, FRB Atlanta Working Paper 2000-19, 2000.
More from this series
JEL Classification:
Subject headings:
Keywords: Vector autoregression ; Monetary policy ; Forecasting
For corrections, contact Elaine Clokey ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal