The Taylor Rule, part 1

I keep referencing an old blog where I broke out the pieces of the Taylor Rule … poorly.  This will be the new one that I point to, and I think that this is pretty interesting so far.  The media is kind of fetishizing the Taylor Rule because it makes the race more interesting: “Will it be Super Dove Janet Yellen who plays fast and loose with the rules or Super Hawk John Taylor whose decisions are super predictable because they’re all based on a perfect model?”

Continue reading “The Taylor Rule, part 1”

Former Fed Governor Tarullo doesn’t much care for models based on inflation.

I linked to this piece in the Links post the other day, but I wanted to dive into it a little more thoroughly, as it pertains to the the Fed Chair, Monetary Policy, etc.

I’ll talk a little about my questions regarding internal Fed politics (maybe too much), and then look at former Fed Governor Tarullo’s white paper “Monetary policy without a working theory of inflation”.  He offers some really good insight into the policy and projection making practices at the fed.

Continue reading “Former Fed Governor Tarullo doesn’t much care for models based on inflation.”