The policy of central banks of different countries varies considerably and notably during economic crisis. In particular, the authors proved the impropriety of the standard Taylor Rule application for Russia during the crisis period of the Russian economy. Therefore, in this paper the authors develop the modified Taylor Rule based on switching between the modes of economic situation. On the basis of made calculations, the authors put forward an assumption that for assessing the effectiveness of the Bank of Russia monetary policy it is more expedient to use the standard Taylor Rule during the pre-crisis period from 2001 to 2008. However, on the other hand, for the crisis period from 2008 to 2011, it is better to use an alternative monetary policy rule, which includes an index of financial stress in the economy, but at the same time eliminates inflation indicator. The authors used two indices as variables of financial stress, taking into account their complexity and availability for different countries, i.e. the IMF index of financial stress and the financial stress index of the Federal Reserve Bank of Kansas City (the Kansas City FED Financial Stress Index). An important advantage of these stress indicators is the fact that they can detect small stress periods, which do not lead to full-blown crisis, and that they were not considered in the studies based on binary crisis variables. The calculations of the authors show that monetary policy is well described by the switching regimes model. For example, during the crisis, this model shows more accurate prediction than the standard Taylor Rule. The model with IMF index of financial stress is more suitable for the Russian economy. The authors' model can help to evaluate the effectiveness of each monetary policy instrument and its degree of influence during different regimes, as well as to determine what tools can specifically switch the regimes or maintain the desired regime. Estimation, analysis and timely adjustment of interest rates will lead to greater flexibility of exchange rate and will help to reduce inflation and inflationary expectations and, consequently, contribute to a smoother transition to inflation targeting.
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