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THE TAYLOR PRINCIPLE IN THE LONG RUN: AN EMPIRICAL PERSPECTIVE
Author(s) -
Chou YuHsi,
Wu JyhLin
Publication year - 2015
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12055
Subject(s) - economics , vector autoregression , taylor rule , output gap , econometrics , inflation (cosmology) , short run , perspective (graphical) , macroeconomics , monetary policy , mathematics , central bank , physics , geometry , theoretical physics
In this paper, we empirically assess the Taylor principle in the long run with a small‐scale, trivariate structural vector autoregression. Using U.S. data spanning the period from 1959Q1 to 2010Q2 and different measures of inflation and the output gap, we find that the Taylor principle is supported in the long run for the post‐1979 era, but the principle is unlikely to hold in the long run for the pre‐1979 era . ( JEL E52, E58)