Year of Graduation
Modeling the Impact of US Monetary Policies on Macroeconomic Variables
AbstractThe current research suggests an alternative way of evaluation US monetary policy and its influence on basic macroeconomic variables with the use of altered Taylor reaction function under circumstances of zero-lower-bound on nominal interest rates. This approach relies on a state-space model that generates time-varying series for the equilibrium real rate of interest and potential output. Additional explanatory variables are added to the function in order to show substantial differences between the estimated reaction coefficients and real outcomes of monetary regulation.Keywords: Federal Reserve, the Fed, Taylor rule, monetary policy reaction function, real interest rate equilibrium, output gap.