A Rule-Based Policy Rate: Inflation Gap, Output Gap and the Deviation
This lesson is part of the course
In this lesson
You compute a Taylor-type rule rate with fictional coefficients for eight quarters, measure how far the actual policy rate deviated from it, count the quarters where policy was clearly looser than the rule and chart both rates.
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Lessons in this course
- Counting Money: Currency, Deposits and the Aggregates M1 to M3 Locked
- Deposit Creation: Rounds, Leaks and the Money Multiplier Locked
- The Quantity Equation: MV = PY, Velocity and Implied Inflation Locked
- A Rule-Based Policy Rate: Inflation Gap, Output Gap and the Deviation Locked
- Policy Stance: Real Rates, the Neutral Rate and Tight vs Loose with IFS Locked
- The Central Bank Balance Sheet: Asset Purchases, Reserves and Bank Liquidity Locked
- Seigniorage and the Inflation Tax in a Simple Steady State Locked
- Inflation-Target Scorecard: 12-Month Inflation, the Band and the Chart Locked