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Full-Text Articles in Social and Behavioral Sciences
A Comparison Of Five Federal Reserve Chairmen: Was Greenspan The Best?, Ray C. Fair
A Comparison Of Five Federal Reserve Chairmen: Was Greenspan The Best?, Ray C. Fair
Cowles Foundation Discussion Papers
This paper examines the performances of the past five Federal Reserve chairmen using optimal control techniques and a macroeconometric model. Each chairman is evaluated in two ways. The first way is comparing the actual performance of the economy under his term relative to what the performance would have been had he behaved optimally. Comparing chairmen only on the basis of the actual performance of the economy is not appropriate because it does not control for different exogenous-variable values and shocks that the Fed has no control over. This comparison is done for a wide range of loss functions. It does …
Evaluating Inflation Targeting Using A Macroeconometric Model, Ray C. Fair
Evaluating Inflation Targeting Using A Macroeconometric Model, Ray C. Fair
Cowles Foundation Discussion Papers
This paper uses a structurally estimated macroeconometric model, denoted the MC model, to evaluate inflation targeting in the United States. Various interest rate rules are tried with differing weights on inflation and output, and various optimal control problems are solved using differing weights on inflation and output targets. Price-level targeting is also considered. The results show that 1) there are output costs to inflation targeting, especially for price shocks, 2) price-level targeting is dominated by inflation targeting, 3) the estimated interest rate rule of the Fed (in Table 4) is consistent with the Fed placing equal weights on inflation and …