New study reveals best monetary policy rule for controlling inflation!
The article presents a model that looks at different ways to control inflation through monetary policy. The model considers targeting either monetary aggregates or interest rates. By analyzing US data from 1960 to 1995, the researchers found that the model with the second policy rule had lower volatility, while the model with the first policy rule had better correlation with output. This model offers an alternative to traditional economic models in understanding and predicting macroeconomic trends.