DP7555 | Estimated Interest Rate Rules: Do they Determine Determinacy Properties?

Author(s)

Publication Date

15/11/2009

JEL Code(s)

Keyword(s)

Programme Area(s)

Abstract

No. I demonstrate that econometric estimations of nominal interest rate rules may tell little, if anything, about an economy's determinacy properties. In particular, correct inference about the interest-rate response to inflation provides no information about determinacy. Instead, it could reveal whether optimal monetary policymaking is performed under discretion or commitment.