TY  - RPRT
        AU  - Gross, Isaac
AU  - Leigh, Andrew
        TI  - Assessing Australian Monetary Policy in the Twenty-First Century
        PY  - 2022/Sep/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 15561
        UR  - https://www.iza.org/publications/dp15561
        AB  - Using the Reserve Bank of Australia's MARTIN model we compare actual monetary policy decisions to a counterfactual in which the cash rate is set according to an optimal simple rule. We find that monetary policy played a crucial role in avoiding a potential recession in 2001 and mitigating the downturn in 2008-2009. By contrast we find that the cash rate was too high during 2016-2019, keeping inflation below the Reserve Bank's target band. Optimal monetary policy in 2016-2019 would have involved a substantially lower cash rate and would have produced significantly better employment outcomes.
        KW  - unemployment
KW  - optimal monetary policy
KW  - output gap
KW  - inflation
        ER  -