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International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page U.S. Monetary Policy and Econometric Modeling: Tales from the FOMC Transcripts 1984-1991
Hali J. Edison and Jaime Marquez
1998-607  (April 1998)

Abstract:  This paper uses the transcripts from the FOMC meetings to characterize the interactions between policymakers and macro models in the formulation of U.S. monetary policy. We develop a taxonomy of these interactions and present two case studies. The first case focuses on the debate on the choice of monetary target and the second case focuses on the 1990/1991 recession. The analysis reveals that U.S. monetary policy relies on models for information. Models give estimates of both the outlook and the response of the economy to policy changes. Models also evolve to recognize the changing context in which policymakers operate--exchange rate flexibility, financial deregulation, and international trade agreements

Full paper (274 KB PDF)

FOMC, econometric modelling, monetary policy, United States

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