Applying Academic Research on Monetary Policy Rules: An Exercise in Translational Economics

In: The Manchester School, Volume 66, Issue S, p. 1-16

Abstract

Recent progress in the practical application of research on monetary policy rules in the United States during the 1990s is examined. The paper focuses on how simple policy rules that describe how the central bank's interest rate responds to the economy have provided a useful framework for actual decision making. It is argued that the process by which economic research is put into practice—called translational economics—is fascinating and worthy of careful study in general; several recent examples from research on monetary policy rules are offered to show why.