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Taylor rule and monetary policy: Does the Taylor rule describe the monetary policy in Sweden?
Dalarna University, School of Technology and Business Studies, Economics.
2019 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

In 1993, economist JB Taylor (1993) observed that the monetary policy in the USA is described by a simple rule, which today is known as the Taylor rule. Since then, many studies were conducted to determine whether Taylor rule explains the monetary policy of central banks all over the world. This study aims to investigate whether the Taylor rule can describe monetary policy in Sweden as initially specified by Taylor (1993). Monetary policy in Sweden from 1995: Q1 to 2018: Q2 is compared to the monetary policy of the USA during the Greenspan years ( 1987: Q4 to 2006: Q1). An ordinary least squares regression method (OLS) is used to estimate the reaction function of the monetary policy of both Sweden and the USA. The results of this study show that the Taylor rule does no describe Monetary policy in Sweden. In contrast, the results show that the US monetary policy during the Greenspan years can be described by the Taylor rule.

Place, publisher, year, edition, pages
2019.
Keywords [en]
Monetary policy, Taylor rule, reaction function, interest rate channel, inflation targeting
National Category
Economics
Identifiers
URN: urn:nbn:se:du-30488OAI: oai:DiVA.org:du-30488DiVA, id: diva2:1331973
Available from: 2019-06-27 Created: 2019-06-27

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • chicago-author-date
  • chicago-note-bibliography
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf