Cross-checking optimal monetary policy with information from the Taylor rule

This paper shows that monetary policy should be delegated to a central bank that cross-checks optimal policy with information from the Taylor rule. Placing some weight on deviations from a Taylor rule reduces the stabilization bias of discretionary monetary policy.

► Cross-checking monetary policy with information from the Taylor rule is beneficial. ► Smaller stabilization bias of discretionary monetary policy. ► Implications for policy delegation.