How robust is the Fed reaction function to changes in the output-gap specification?

Using alternative measures of the output gap, we estimate a forward-looking monetary policy reaction function, similar to those estimated by Clarida et al. (1998, 2000), for Greenspan's period as a chairman of the Board of Governors of the US Federal Reserve System. We are able to show that the reaction function that considers an output gap based on the industrial production index instead of the unemployment rate better captures the behaviour of the Federal Reserve during Greenspan's period.