CERF Blog

The Taylor Rule The Taylor Rule relates the target federal funds rate with the gap between actual and target inflation and between actual and capacity output.  The higher is inflation or the lower is the output gap, the higher is the target funds rate.  The rule is both descriptive and prescriptive.  It was originally proposed… Read more

It’s not everyday that Greg Mankiw and Paul Krugman agree.  When they do, it’s worth thinking about.  Here are their blog posts: Krugman & Mankiw. The topic is a Taylor Rule, which is a method, proposed John Taylor, for determining what Fed Policy should be.  That is, what is the interest rate that the Fed… Read more