Wednesday, February 12, 2025
Hoover Institution, Stanford University
David Papell, Joel W. Sailors Endowed Professor of Economics at the University of Houston discussed “Policy Rule Evaluation for the Fed’s Strategy Review,” a paper joint with Sebin Nidhiri (University of Houston) and Swati Singh (University of Houston).
PARTICIPANTS
David Papell, John Taylor, John Cochrane, Annelise Anderson, Michael Boskin, Ruxandra Boul, Erika Callicott, Randi Dewitty, Christopher Erceg, Bob Hall, Jon Hartley, Robert Hetzel, Laurie Hodrick, Robert Hodrick, Nicholas Hope, Erik Hurst, Morris Kleiner, Evan Koenig, Jeff Lacker, David Laidler, Nelson Layfield, Mickey Levy, Axel Merk, Ilian Mihov, Sebin Nidhiri, Charles Plosser, Valerie Ramey, Georg Rich, J.R. Scott, Krishna Sharma, Swati Singh, Harald Uhlig, Marc Weidenmeier
ISSUES DISCUSSED
David Papell, Joel W. Sailors Endowed Professor of Economics at the University of Houston discussed “Policy Rule Evaluation for the Fed’s Strategy Review,” a paper joint with Sebin Nidhiri (University of Houston) and Swati Singh (University of Houston).
John Taylor, the Mary and Robert Raymond Professor of Economics at Stanford University and the George P. Shultz Senior Fellow in Economics at the Hoover Institution, was the moderator.
PAPER SUMMARY
The Federal Reserve Board started a strategy review at the beginning of 2025 and intends to complete by late summer of 2025. After its only previous review, the Federal Open Market Committee adopted a far-reaching Revised Statement on Longer-Run Goals and Monetary Policy Strategy in August 2020. We analyze and develop policy rules that are either in accord with the original 2012 statement or inspired by the revised 2020 statement and use the rules to evaluate monetary policy using the Federal Reserve Board/United States model. We evaluate policy rules categorized by traditional, shortfalls, Asymmetric Coefficient Inflation Targeting, and Asymmetric Target Inflation Targeting versions of non-inertial and inertial Taylor and balanced approach rules. Economic performance is better with balanced approach rules than with Taylor rules, worse with shortfalls rules than with traditional rules, better with inertial rules than with non-inertial rules, and better with the two asymmetric inflation targeting rules than with traditional rules.
To read the paper, click the following link
https://www.hoover.org/sites/default/files/2025-02/Strategy%20Review%2002-04-2025.pdf
To read the slides, click the following link
https://www.hoover.org/sites/default/files/2025-02/Strategy%20Review%20Hoover.pdf
