Can AI Beat the Central Bank?

Policy decisions navigate the complex interplay between inflation and unemployment, dynamically adjusting policy rates based on Phillips curve trade-offs and exhibiting reactivity to economic shocks, all while striving for adherence to Taylor rule principles and demonstrating performance consistency across varied economic landscapes, as evidenced by analyses of economic loss components and action interpretations.

New research shows surprisingly simple artificial intelligence methods can outperform traditional economic policy rules in managing macroeconomic uncertainty.