A Federal Reserve reaction function featured here predicts the actual path of the funds rate during most of the period from 1979 to 1997. The estimated function indicates that the Fed has been forward-looking, responding both to actual inflation and to the expected change in its future direction...

Recent research has emphasized that the Federal Reserve under Chairman Alan Greenspan was forward looking, smoothed interest rates, and focused on core inflation. The semiannual monetary policy reports to U.S. Congress indicate that the measure of inflation used in monetary policy deliberations...

This article estimates a Taylor rule according to which the Federal Reserve is forward looking, focused on core inflation, and smoothes interest rates. Using the Greenbook inflation forecasts and the real-time output gap, the estimated policy rule predicts very well the actual path of the...

Using real time estimates of output gaps or Greenbook forecasts of the unemployment rate, this article estimates Taylor-type policy rules that predict the actual behavior of the funds rate during two sample periods, 1968Q1 to 1979Q2 and 1979Q3 to 1994Q4. The inflation rate response coefficient...