Inflation Measure, Taylor Rules, and the Greenspan-Bernanke Years

Economic Quarterly—Volume 96, Number 2—Second Quarter 2010—Pages 123–151









Inflation Measure, Taylor

Rules, and the

Greenspan-Bernanke Years

Yash P. Mehra and Bansi Sawhney









R

ecent research has highlighted several aspects of monetary policy un-

der Chairman Alan Greenspan, noting that the Federal Reserve was

forward looking, smoothed interest rates, and focused on core infla-

tion.1 Some analysts have estimated Taylor rules that incorporate these salient

features of monetary policy, and have shown that monetary policy actions

taken by the Federal Reserve in the Greenspan era can broadly be explained

by these estimated Taylor rules. Using a core measure of consumer price infla-

tion (CPI),