NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Evolution of U.S. Monetary Policy: 2000 - 2007

Michael T. Belongia, Peter N. Ireland

NBER Working Paper No. 22693
Issued in September 2016
NBER Program(s):Monetary Economics

A vector autoregression with time-varying parameters is used to characterize changes in Federal Reserve policy that occurred from 2000 through 2007 and describe how they affected the performance of the U.S. economy. Declining coefficients in the model’s estimated policy rule point to a shift in the Fed’s emphasis away from stabilizing inflation over this period. More importantly, however, the Fed held the federal funds rate persistently below the values prescribed by this rule. Under this more discretionary policy, inflation overshot its target and the funds rate followed a path reminiscent of the "stop-go" pattern that characterized Fed behavior prior to 1979.

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Document Object Identifier (DOI): 10.3386/w22693

Published: Michael T. Belongia & Peter N. Ireland, 2016. "The evolution of U.S. monetary policy: 2000–2007," Journal of Economic Dynamics and Control, vol 73, pages 78-93. citation courtesy of

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