Finance Seminar（2013-19）

Topic:Estimating Monetary Policy Rules When Nominal Interest Rates Are Stuck at Zero

Speaker:Jinill Kim, Korea University

Time:Thursday, 31 October, 10:00-11:30

Location:Room 217, Guanghua Building 2

Abstract：Did the Federal Reserve's response to economic fundamentals change with the onset of the Global Financial Crisis? Estimation of a monetary policy rule to answer this question faces a censoring problem since the interest rate target has been set at the zero lower bound since late 2008. Surveys by forecasters allow us to sidestep the problem and to use a conventional regression. We find that the Fed's inflation response has decreased and that the unemployment response has remained as strong; this suggests that the Federal Reserve's commitment to stable inflation has become weaker in the eyes of the professional forecasters.