Why Are Target Interest Rate Changes so Persistent?
利用实时数据、嵌套模型、叙事分析和利率预测等多种方法，检验了美国央行政策惯性的来源，发现利率平滑假说比持久冲击假说更能解释观察到的政策惯性，有助于解决货币经济学中的一个关键谜题。
While the degree of policy inertia in central banks' reaction functions is a central ingredient in theoretical and empirical monetary economics, the source of the observed policy inertia in the United States is controversial, with tests of competing hypotheses, such as interest-smoothing and persistent-shocks, being inconclusive. This paper employs real time data; nested specifications with flexible time series structures; narratives; interest rate forecasts of the Fed, financial markets, and professional forecasters; and instrumental variables to discriminate between competing explanations of policy inertia. The evidence strongly favors the interest-smoothing explanation and thus can help resolve a key puzzle in monetary economics.