The Federal Reserve’s reaction function, which summarizes how the Federal Reserve (Fed) alters monetary policy in response to economic developments, plays an important role in macroeconomic and policy analyses. It can be helpful in predicting actual policy actions, thereby serving as a benchmark for assessing the current stance and the future direction of monetary policy. Also, in macro models, the reaction function is central in evaluating Fed policy and determining effects of other macro policies or economic shocks, implying macroeconomic performance may itself depend upon the conduct of monetary policy. Consequently, there is considerable interest in identifying the nature of actual policy pursued by the Fed and determining whether the estimated reaction function fostered or hindered macroeconomic stability.1

José R. Sánchez-Fung (2002) - Estimating a Monetary Policy Reaction Function for The Dominican Republic, Discussion Paper 02/01 University of Kent

This paper specifies and estimates a hybrid monetary policy base reaction function for the Dominican Republic (DR). The estimated reactions suggest that the Central Bank has been biased towards targeting the gap between the
parallel and official exchange rates, apparently doing so in a more systematic fashion after the mid 1980s. Remarkably, these findings are in line with the Central Bank’s long-standing endorsement of a multiple exchange rate regime, and could imply a process of learning, given the monetary authorities’ preferences.

And some small snippets; Wikipedia and the Apelia Economics Blog.  

Macroeconomic forecasts are used extensively in industry and government. The historical accuracy of US and UK forecasts are examined in the light of different approaches to evaluating macroforecasts. Issues discussed include the comparative accuracy of macroeconometric models compared to their time series alternatives, whether the forecasting record has improved over time, the rationality of macroeconomic forecasts and how a forecasting service should be chosen. The role of judgement in producing the forecasts is also considered where the evidence unequivocally favors such interventions. Finally the use of macroeconomic forecasts and their effectiveness is discussed. The conclusion drawn is that researchers have paid too little attention to the issue of improving the forecasting accuracy record. Finally, areas where improvements are most likely to be found are discussed.

Despite a significant decline in the pace of economic growth in the second half of 2000, macroeconomic forecasters underpredicted real GDP growth and overpredicted the unemployment rate by a significant amount, for the fifth consecutive year. On average, real GDP forecasts were about 2 percentage points below the actual data for the
1996--2000 period, and unemployment rate forecasts about 0.5 percentage point above. On a more positive note, forecasters ended their chronic overprediction of inflation during much of this period. Nevertheless, surprisingly
large and persistent errors in recent forecasts of GDP, inflation, and unemployment have perplexed macroeconomists and policymakers for quite some time, and they merit closer examination.1

The macro-economic short-term forecasting record in the West over the past thirty years is very poor. Modern non-linear signal processing techniques can be used to show that such inaccuracy is a deep and inherent property of the data themselves. The forecasting record simply cannot be improved. Much economic policy still focuses on short-term intervention based on short-term forecasts. But such efforts are futile because forecasts of sufficient accuracy over time cannot be made.

Broadly defined, macroeconomic forecasting is alive and well. Nonstructural forecasting, which is based largely on reduced-form correlations, has always been well and continues to improve. Structural forecasting, which aligns itself with economic theory and hence rises and falls with theory, receded following the decline of Keynesian theory. In recent years, however, powerful new dynamic stochastic general equilibrium theory has been developed, and structural macroeconomic forecasting is poised for resurgence.

Despite the multiplicity of research on the surge of the financial industry the world over, little is  done  to  understand  the  national  context  shaping  the  objectives  and  designs  of  this  economic  sector. The overall image that emerges from the literature is that globalisation and liberalisation  of  economies make  the  expansion  of  this  sector  indispensable  for  further  development.  This  paper  stresses  the  heterogeneity  of  the  socio-psychological  origins  of  the  need  for  saving  and  contribution  management,  as  well  as  the  heterogeneity  of  the  sources  of  savings  and  loan  funding.  In  particular  this  paper  discusses  the  following  national  characteristics:  1)  the  social  belief in trust that smoothes the progress of insurance and pension fund business in the USA, 2)  the traditional preference for saving and lending in France that explains the advance of banks and  credit  institutions  for  analysis  of  financial  risks,  and  3)  the  natural  resources  ground  rent  of  Russian  State  provides  the  formation  of  sovereign-wealth  funds, which  require  an  up  to  date  knowledge based  investment management. This paper  serves as a  road  sign  indicating  that  the  path of uniform financial  industry formation is a waste of  time and may bring about social and  economic troubles.

The paper investigates the impact of ownership concentration on GDP growth, for a sample of 18 OECD countries over the period 1980 to 2004. The econometric analysis shows that more concentrated ownership can speed up growth, for countries approaching the technological frontier, provided that labour market regulation is su¢ ciently tight. In the absence of employment regulation, the logic of …nancial markets discipline applies and dispersed ownership appears as more favorable for growth. Based on econometric results, impact coe¢ cients are calculated allowing to evaluate the growth points gained/lost following a given change in ownership concentration. This exercise reveals that a reform in the domain of ownership structure can yield sizeable e¤ects in terms of growth. Importantly, these e¤ects are unequally
distributed across countries: Anglo-Saxon countries would take more advantage of deregulation (i.e. increased dispersion of ownership in a context of deregulated labour markets) while continental European countries would bene…t more from increased concentration of ownership in a context of re-inforced labour regulation.

Many motives for saving a portion of one’s income co-exist and their relative importance changes over the life-cycle. However, most existing work focuses on only one of those motives and makes simplifying assumptions about the other motives so that they can be relegated to the background. All the more it is important to investigate heterogeneity in saving behavior in the presence of various co-existing saving motives. This paper is concerned with linking heterogeneity in German households’ savings decisions to four coexisting saving motives. First, I find that the importance that households attach to the saving motives is related to how much households save at different life stages. Second, I
classify the saver type of the households based on whether they engage in regular savings plans, or rather save irregularly and without a savings plan and I find that saving motives are related to the saver type of the household. The results show that heterogeneity in saving behavior along two dimensions – with respect to the saving rate and the saver type – is systematically related to the importance that households attach to different saving motives. This suggests that policy reforms that change the importance of certain saving motives in the eyes of private households might alter household saving behavior in various ways.

We study the long-run relation between money, measured by inflation or interest rates, and unemployment. We first discuss data, documenting a strong positive relation between the variables at low frequencies. We then develop a framework where both money and unemployment are modeled using explicit microfoundations, integrating and extending recent work in macro and monetary economics, and providing a unified theory to analyze labor and goods markets. We calibrate the model, to ask how monetary factors account quantitatively for low-frequency labor market behavior.
The answer depends on two key parameters: the elasticity of money demand, which translates monetary policy to real balances and profits; and the value of leisure, which affects the transmission from profits to entry and employment. For conservative parameterizations, money accounts for some but not that much of trend unemployment — by one measure, about 1/5 of the increase during the stagflation episode of the 70s can be explained by monetary policy alone. For less conservative but still reasonable parameters, money accounts for almost all low-frequency movement in unemployment over the last half century.

This paper estimates forward-looking Taylor rules for the euro area. Using the asymmetries in inflation and cyclical output developments across countries, we investigate the adequacy of the single monetary policy for each of the European Monetary Union (EMU) member countries.Notable differences emerge across the countries. Taking a euro area perspective, we also show that it depends upon the underlying country weighting scheme in the monetary decision process of the ECB whether or not there has been a synchronisation of business and inflation cycles among the EMU member countries over the years. Finally, we produce an estimate of the actual policy weights the ECB has implicitly attached to each of the member countries. Developments in small member countries have received more than proportional weightsin actual monetary policy decisions of the ECB.