We look at how well several alternative Taylor-rule specifications describe Federal Reserve policy decisions in real time, using the newly developed Giacomini and Rossi (2007) test for non-nested model selection in the presence of (possible) parameter instability. Further, we isolate those...

The role of foreign capital inflow, foreign direct investment (FDI) and foreign portfolio investment (FPI), on export behavior of both recipients and non-recipient competing firms in the same sector often guides economic development policy. By using panel data of Indian IT firms over...

We first show that the recent success of modern macroeconomic models in forecasting nominal exchange rates, evaluated using the Clark and West (2006) inference procedure, is partly due to the presence of the constant term (drift), in addition to the economic fundamentals. We then model the...

The size of the output gap coefficient is the key determinant of whether quantitative easing since 2009 and continued near-zero interest rates can by justified by a Taylor rule. Fed Chair Ben Bernanke and Vice-Chair Janet Yellen have argued that John Taylor proposed a monetary policy rule with a...

A growing body of empirical macroeconomic literature suggests that analyses using real-time data often yield substantially different—and more accurate—conclusions.

Rules-based monetary policy evaluation has long been central to macroeconomics. Using the original Taylor rule, a modified Taylor rule with a higher output gap coefficient, and an estimated Taylor rule, we define rules-based and discretionary eras by smaller and larger policy rule deviations,...

Global economic integration may have made other countries more dependent on each other and weakened their initial responses to U.S. economic fluctuations.

Using a difference-in-differences estimation framework and state-level data, we investigate the potential role of HIV/AIDS in contributing to declining abortion utilization in the United States. Our results suggest that the perceived risk of HIV contraction negatively affected unwanted...

This paper argues that considerable switches in monetary policy are able to explain a major part of the forward discount puzzle. We build a theoretical model suggesting that violations of the uncovered interest rate parity are owed to shifts in monetary policy from a destabilizing (when the...