Additional_TaylorRule

Additional_TaylorRule - target. 5 P/P i Target 1 Policy...

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1 Chapter 11 The Taylor Policy Rule for the Central Bank
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2 P/P i Slope = 1 Target Inflation Rate Policy Rule
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3 Taylor Rule: Fed Only Has an Inflation Target If inflation exceeds the target, the Fed raises the real interest rate. If inflation is below the target, the Fed lowers the real interest rate.
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4 Changing the Target Inflation Rate Example 1: the Fed decides to set a lower inflation
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Unformatted text preview: target. 5 P/P i Target 1 Policy Rule 1 Target 2 Policy Rule 2 6 P/P Y AD: Policy Rule 1 AD: Policy Rule 2 7 Example 2: the Fed decides to set a higher inflation target. 8 P/P i Target 2 Policy Rule 2 Target 1 Policy Rule 1 9 P/P Y AD: Policy Rule 2 AD: Policy Rule 1...
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Additional_TaylorRule - target. 5 P/P i Target 1 Policy...

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