We investigate the possibility that the Taylor rule should be formulated as a threshold process such that the Federal Reserve acts more aggressively in some circumstances than in others. It seems reasonable that the Federal Reserve would act more aggressively when inflation is high than when it...

This paper uses the short-run restrictions implied by a simple aggregate demand-aggregate supply model as an aid in identifying structural shocks. Combined with the Blanchard-Quah restriction, it allows estimation of the slope of the aggregate supply curve, the variances of structural demand and...