The Taylor rule in Australia, 1989-2014

Article

Elston, Frank and Pensiero, Domenico. 2016. "The Taylor rule in Australia, 1989-2014." Academy of Taiwan Business Management Review. 12 (1), pp. 12-19.
Article Title

The Taylor rule in Australia, 1989-2014

ERA Journal ID211566
40538
Article CategoryArticle
AuthorsElston, Frank (Author) and Pensiero, Domenico (Author)
Journal TitleAcademy of Taiwan Business Management Review
Academy of Taiwan Business Management Revie
Journal Citation12 (1), pp. 12-19
Number of Pages8
Year2016
PublisherTaiwan Institute of Business Administration
Place of PublicationTaiwan
ISSN1813-0534
Web Address (URL)http://www.jtiba.com
Abstract

The Taylor rule is a rules based monetary policy whereby the policy maker reacts to inflation and output gaps in setting the policy instrument, usually a short term interest rate. It can be prescriptive or descriptive. This study examines whether the Taylor rule describes the behaviour of the Reserve Bank of Australia since 1989, a period encompassing the last three Governors of the RBA. Using the traditional gap coefficients of .5 we find the implied Taylor cash rate, which then can be compared with the actual cash rate. The Taylor rule describes well the policymaking during the era of Governor Glenn Stevens, but does not describe as well the policymaking during the two predecessors. The study also determines the least squares estimates of the coefficients and finds that both the inflation and output coefficients exceed .5. A supplementary finding is that lagging the output and inflation gaps did not make any material difference.

KeywordsTaylor rule; monetary policy; inflation gap; output gap
ANZSRC Field of Research 2020380112. Macroeconomics (incl. monetary and fiscal theory)
Byline AffiliationsSchool of Commerce
Institution of OriginUniversity of Southern Queensland
Permalink -

https://research.usq.edu.au/item/q2549/the-taylor-rule-in-australia-1989-2014

Log in to edit
  • 1728
    total views
  • 12
    total downloads
  • 2
    views this month
  • 0
    downloads this month

Export as

Related outputs

The development of Chinese air express integrators
Deng, Yu, Zhang, Yahua and Elston, Frank. 2023. "The development of Chinese air express integrators." Case Studies on Transport Policy. 13. https://doi.org/10.1016/j.cstp.2023.101025
The influence of ownership structure on the extent of CSR reporting: An emerging market study
Al Fadli, Amer, Sands, Juhn, Jones, Gregory, Beattie, Claire and Pensiero, Dom. 2022. "The influence of ownership structure on the extent of CSR reporting: An emerging market study." Business and Society Review. 127 (3), pp. 725-754. https://doi.org/10.1111/basr.12286
Corruption risk and stock market effects: evidence from the defence industry
Krishnamurti, Chandrasekhar, Pensiero, Domenico and Velayutham, Eswaran. 2021. "Corruption risk and stock market effects: evidence from the defence industry." Pacific-Basin Finance Journal. 70, pp. 1-19. https://doi.org/10.1016/j.pacfin.2021.101681
Board independence and CSR reporting: pre and post analysis of JCGC 2009
Al Fadli, Amer, Sands, John, Jones, Greg, Beattie, Claire and Pensiero, Dominic. 2020. "Board independence and CSR reporting: pre and post analysis of JCGC 2009." International Journal of Law and Management. 62 (2), pp. 117-138. https://doi.org/10.1108/IJLMA-11-2018-0259
Drivers of corruption risk and stock market effects: evidence from the defence industry
Pensiero, Domenico, Velayutham, Eswaran and Krishnamurti, Chandrasekhar. 2017. "Drivers of corruption risk and stock market effects: evidence from the defence industry." 8th Conference on Financial Markets and Corporate Governance (FMCG)2017. Wellington, New Zealand 19 - 21 Apr 2017 United States. https://doi.org/10.2139/ssrn.2903053
Socially responsible firms and mergers and acquisitions performance: Australian evidence
Krishnamurti, Chandrasekhar, Shams, Syed, Pensiero, Domenico and Velayutham, Eswaran. 2019. "Socially responsible firms and mergers and acquisitions performance: Australian evidence." Pacific-Basin Finance Journal. 57, pp. 1-16. https://doi.org/10.1016/j.pacfin.2019.101193
Board Gender Diversity and CSR Reporting: Evidence from Jordan
Al Fadli, Amer, Sands, John, Jones, Greg, Beattie, Claire and Pensiero, Dom. 2019. "Board Gender Diversity and CSR Reporting: Evidence from Jordan." Australasian Accounting Business and Finance Journal. 13 (3), pp. 29-52. https://doi.org/10.14453/aabfj.v13i3.3
Determinants of defence industry corruption risk: firm level empirical evidence using transparency international‘s anti-corruption index
Krishnamurti, Chandrasekhar, Pensiero, Domenico and Velayutham, Eswaran. 2019. "Determinants of defence industry corruption risk: firm level empirical evidence using transparency international‘s anti-corruption index." Singapore Economic Review. 64 (3), pp. 675-708. https://doi.org/10.1142/S0217590816500053
Moore's law and the regulation of securities markets
Petruzzi, Christopher R. and Elston, Frank A.. 2014. "Moore's law and the regulation of securities markets." International Research Journal of Applied Finance. 5 (2), pp. 161-168.
The information technology revolution in financial services: using IT to create, manage and market financial products
Sachs, William S. and Elston, Frank. 1994. The information technology revolution in financial services: using IT to create, manage and market financial products. Chicago, IL. United States. Probus Publishing.
Investor sentiment, profitability and offer price band: evidence from the Indian IPO market
Pensiero, Dom and Krishnamurti, Chandrasekhar. 2014. "Investor sentiment, profitability and offer price band: evidence from the Indian IPO market." Global Economy and Finance Journal. 7 (2), pp. 59-70.
Comparing research on Chinese students study abroad decision-making: China-based versus overseas-based perspectives
Liu, Xuemei, Elston, Frank and Zhou, Peng. 2013. "Comparing research on Chinese students study abroad decision-making: China-based versus overseas-based perspectives." 23rd International Business Research Conference. Melbourne, Australia 18 - 20 Nov 2013 Melbourne, Australia.
The Taylor rule in Australia
Elston, Frank. 2013. "The Taylor rule in Australia." 23rd International Business Research Conference. Melbourne, Australia 18 - 20 Nov 2013 Melbourne, Australia .
An overview of corporate governance in China
Elston, Frank. 2010. "An overview of corporate governance in China." International Journal of Accounting Information Science and Leadership. 3 (5), pp. 52-64.
Transition of graduates from backpack-to-briefcase: a case study
McIlveen, Peter and Pensiero, Dominic. 2008. "Transition of graduates from backpack-to-briefcase: a case study." Education + Training. 50 (6), pp. 489-499. https://doi.org/10.1108/00400910810901818
Developing an integrated approach to graduates' transition into the workforce
Pensiero, Dominico and McIlveen, Peter. 2006. "Developing an integrated approach to graduates' transition into the workforce." Ogunmokun, Gabriel, Gabbay, Rony and Rose, Janelle (ed.) 2nd Biennial Conference of the Academy of World Business, Marketing and Management Development: Business Across Borders in the 21st Century. Paris, France 10 - 13 Jul 2006 Perth, Western Australia.