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Federal Reserve Bank of Dallas
Globalization Institute Working Papers
The Federal Reserve in a globalized world economy
This paper starts from the theoretical observation that simple rules-based monetary policy will result in good economic performance in a globalized world economy and the historical observation that this occurred during the Great Moderation period of the 1980s and 1990s. It tries to answer a question posed by Paul Volcker in 2014 about the global repercussions of monetary policies pursued by advanced economy central banks in recent years. I start by explaining the basic theoretical framework, its policy implications, and its historical relevance. I then review the empirical evidence on the size of the international spillovers caused by deviations from rules-based monetary policy, and explore the many ways in which these spillovers affect and interfere with policy decisions globally. Finally, I consider ways in which individual monetary authorities and the world monetary system as a whole could adhere better to rules-based policies in the future and whether this would be enough to achieve the goal of stability in the globalized world economy.
Cite this item
John B. Taylor, The Federal Reserve in a globalized world economy, Federal Reserve Bank of Dallas, Globalization Institute Working Papers 200, 01 Oct 2014.
Note: Published as: Taylor, John B. (2016), "The Federal Reserve in a Globalized World Economy," in The Federal Reserve's Role in the Global Economy: A Historical Perspective, ed. Michael D. Bordo and Mark A. Wynne (New York, NY: Cambridge University Press), 195-217.
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- F5 - International Economics - - International Relations, National Security, and International Political Economy
This item with handle RePEc:fip:feddgw:200
is also listed on EconPapers
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