Taylor rule

Doug Henwood dhenwood at panix.com
Mon Feb 7 11:27:22 PST 2000

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Today's WSJ has a piece on the Taylor rule (see below). Dismal.com has a Taylor rule calculator at <http://www.dismal.com/toolbox/taylor.stm>. If you think the "natural" rate of unemployment is 3.0% and have a target inflation rate of 3.0% (they won't let you go any higher!), then the Federal funds rate should be 0.4%, instead of 5.75%. Let 'er rip, Alan!

Doug

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