Orphanides, Athanasios; Williams, John C. - Federal Reserve Bank of San Francisco - 2007
We examine the performance and robustness properties of monetary policy rules in an estimated macroeconomic model in … rule suggested by numerous researchers who have argued in
favor of policy rules that respond to the growth rate of output …∗t)+epi,t, epi ∼ iid(0,σ2epi), (4)
ut = φuuet+1 +(1−φu)ut−1 +αu (ret −r∗)+eu,t, eu ∼ iid(0,σ2eu), (5)
where pi denotes inflation, u …