Business news often gives the impression that the effects of monetary policy on the macroeconomy are well understood and predictable. The author of this article, however, believes that, far from sharing such certainty, policymakers and economists alike have knowledge limited by difficulties in...

Monetary policy analysts looking for a model on which to base decisions may consider two popular approaches-the New Keynesian (NK) and the identified vector autoregression (VAR) approaches. Choosing between the two can be difficult: NK models are stylized and have simple rules while structural...

We explore two popular approaches to empirical analysis of monetary policy: the New Keynesian and the identified vector autoregression approaches. Stylized models of private behavior coupled with simple rules describing policy behavior characterize New Keynesian work. Vector autoregressions...