Monetary Policy Regimes and the Reduced Form for Interest Rates.

This study investigates whether the recent poor performance and inst ability of reduced-form interest-rate equations can be accounted for by changes in monetary policy regimes. The results imply that reduced -form coefficients move by statistically-significant and economically -meaningful amounts in response to such policy parameter shifts. Both in-sample and out-of-sample predictions from the models that allow f or the endogeneity of the money stock outperform those produced by the conventional specification. Copyright 1987 by Ohio State University Press.