TY  - JOUR
AU  - Ball,Laurence
AU  - Tchaidze,Robert
TI  - The Fed and the New Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8785
PY  - 2002
Y2  - February 2002
UR  - http://www.nber.org/papers/w8785
L1  - http://www.nber.org/papers/w8785.pdf
N1  - Author contact info:
Laurence M. Ball
Department of Economics
Johns Hopkins University
Baltimore, MD 21218
Tel: 410/516-7605
Fax: 410/516-7600
E-Mail: lball@jhu.edu
M1  - published as Ball, Laurence and Robert R. Tchaidze. "The Fed And The New Economy," American Economic Review, 2002, v92(2,May), 108-115.
AB  - This paper seeks to understand the behavior of Greenspan's Federal Reserve in the late 1990s.  Some authors suggest that the Fed followed a simple 'Taylor rule,' while others argue that it deviated from such a rule because it recognized that the 'New Economy' permitted an easing of policy.  We find that a Taylor rule based on inflation and unemployment does break down in the late 1990s.  However, the Fed's behavior appears stable once one accounts for the falling NAIRU of the period.  A rule based on inflation and the deviation of unemployment from the NAIRU captures the Fed's behavior through the entire period from 1987 to 2000.
ER  -