Consider the following simple monetary rules estimated for two different periods, 1969-1985 and 1985-2005, and interpret each rule. During which period does the Fed appear to be most anti- inflation? Explain your answer.

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Chapter16: Monetary Policy
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Consider the following simple monetary rules estimated for two different periods, 1969-1985 and
1985-2005, and interpret each rule. During which period does the Fed appear to be most anti-
inflation? Explain your answer.
Monetary Policy Rule
Period
1969-1985
R₁ = 6.35 +0.67 (π, t-π)
1985-2005 R 1.35 +1.34 (tn)
(Source: Estimated using FRED II data)
Transcribed Image Text:Consider the following simple monetary rules estimated for two different periods, 1969-1985 and 1985-2005, and interpret each rule. During which period does the Fed appear to be most anti- inflation? Explain your answer. Monetary Policy Rule Period 1969-1985 R₁ = 6.35 +0.67 (π, t-π) 1985-2005 R 1.35 +1.34 (tn) (Source: Estimated using FRED II data)
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