Carvalho, Carlos Viana de; Eusepi, Stefano; Mönch, Emanuel - 2021
Ordinary Least Squares (OLS) estimation of monetary policy rules produces potentially inconsistent estimates of policy … in favor of OLS estimation of monetary policy rules. To that end, we show analytically in the three-equation New … Keynesian model that the asymptotic OLS bias is proportional to the fraction of the variance of regressors accounted for by …