Taylor and Keynesian monetary policy rules

Abstract

In this paper, the Taylor rule and the Keynesian monetary policy rules recently introduced by Atesoglu are empirically compared for the 1994:2-2007:4 period. The findings reveal that the Atesoglu rule and the inflation-augmented Atesoglu rule are able to provide a better explanation of the federal funds rate than the Taylor rule. Results suggest that the Atesoglu rules based on the neutral interest rate idea of Keynes are likely to provide better predictions of future developments in monetary policy.

Keywords:

• Keynesian monetary policy rule
• monetary policy
• Taylor rule