actual ffr Vol actual above taylors bc funds rate high to try to increase

Actual ffr vol actual above taylors bc funds rate

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±aylor’s rule vs. actual f.f.r: Vol.= actual above taylor’s b/c funds rate high to try to increase interest rates & A.D; didn’t a´ect R/R*BU± recession His Π*, target inflation was lower than 2%; reduced t.i Employment Act of ’46: Fed had to max. output and employment vs. Humphrey Hawkins: Recessions: How did they start?: Fed before: Aµer: Economic downturn when Y>Y*? Greenspan: supposedly fed can’t directly control R* so instead, in³uences short term rates. Actual matched taylor’s unTl ’00 Decreased R* bc thought R* fell Bernanke: unconvenTonal/i.r. low as possible Yellen: small di´erence, says ±.R R is too low; wants 2 raise int.rate Adverse price shock will lead to lower Y*b/c movement along & to the leF of AD. New point=equilibrium. ²avorable= higher Y* Absence of change in FFR b/c real Y* revised down but real Y wasn’t Keynesian ±heory of Consump:equil. Level of Shiµs: Y increase by mult. x shiµ of spending line G incr. spending line shiµs up won’t a´ect R Moves along AD curve: price shock rise Shiµs in AD curve: 07-09: monetary: ²scal: ±ax cut: ±emp. tax inc.: C will not fall; paid by reducTon in h.h. saving Life-Cycle/Permanent Income ±heory of consumpTon: ±ax cuts: IA curve: ³at b/c wage increase based on past ones; rise in expected in³aTon Shiµs: price shock like high oil
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