01785cas a2200253 a 4500 AALejournalIMF008836 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451861679 1018-5941 BD-DhAAL BD-DhAAL Tchaidze, Robert. The Use and Abuse of Taylor Rules : How Precisely Can We Estimate Them? / Robert Tchaidze, Alina Carare. Washington, D.C. : International Monetary Fund, 2005. 1 online resource (30 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper draws attention to inconsistencies in estimating simple monetary policy rules and their implications for policy advice. We simulate a macroeconomic model with a backward reaction function similar to Taylor (1993). We estimate different versions of a policy rule, using these simulated data. Under certain circumstances, estimations document an illusionary presence of a lagged interest rate, or of forward-looking behavior. Our results are consistent with the fact that several authors found very different versions of monetary policy rules, all fitting the U.S. data well. We also survey the literature, providing a list of issues complicating practical use of Taylor rules. Mode of access: Internet Carare, Alina. IMF Working Papers; Working Paper ; No. 2005/148 Full text available on IMF http://elibrary.imf.org/view/journals/001/2005/148/001.2005.issue-148-en.xml IMF e-Library