This paper models Federal Reserve policy using Taylor's rule for the nominal interest-rate target and examines the difference between the actual Federal Funds Rate and the Taylor Rule model of behavior for distinct structural changes. Using the real-time macroeconomic data available to the Fed...

This paper estimates Taylor-type interest rates for the United States allowing for both time and state dependence. It provides evidence that the coefficients of the Taylor rule change significantly over time, and that the behavior of the Federal Reserve over the cycle can be explained using a...

The recent macroeconomic literature stresses the importance of managing heterogeneous expectations in the formulation of monetary policy. We use a stylized macro model of Howitt (1992) to investigate inflation dynamics under alternative interest rate rules when agents have heterogeneous...