Economics Dictionary of ArgumentsHome
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| Taylor Rule: The Taylor Rule is an economic formula used by central banks to set interest rates based on inflation and economic output. It suggests that the nominal interest rate should be adjusted in response to changes in inflation and the output gap from its potential level, aiming to stabilize the economy. See also Central Bank, Interest rates, Inflation, Economy, Economic growth. _____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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John Brian Taylor on Taylor Rule - Dictionary of Arguments
Mause I 231 Taylor Rule/State intervention/Monetary policy/Taylor: The Taylor rule for state intervention is based on money market rates. Taylor tried to identify the relationship between interest rate developments and the potential final target variables in the US using a policy response function.(1),(2) >Interest rates, >Interventions. As a rule, the Federal Reserve System's Open Market Committee (FOMC) has changed the Federal Funds Rate whenever there have been deviations between the current (average) and desired rate of inflation (inflation gap) and differences between the real domestic product and a long-term equilibrium level (output gap). The central bank increases the money market rate with rising inflation and higher economic growth and vice versa (feedback rule). If the Taylor rule is to be operationalised, statements on the long-term (equilibrium) real interest rate level, the inflation rate and domestic product targets and information on the reaction parameters are required. >Inflation targeting. Problem: the required data is only available with a time delay and will also be readjusted frequently and to a not inconsiderable extent in the following period. VsTaylor: Monetary policy should not react to historical values of the inflation or output gap, but anticipate the gaps expected in the future and initiate appropriate countermeasures. See also Edge Width Problem. >Monetary policy. 1. John B. Taylor,“Discretion Versus Policy Rules in Practice”, Carnegie-Rochester Conference Series on Public Policy 39, 1993 p. 195– 214. 2. John B. Taylor, “A Historical Analysis of Monetary Policy Rules,” In Monetary Policy Rules, J.B. Taylor, ed. Chicago 1999._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconTayl I John Brian Taylor Discretion Versus Policy Rules in Practice 1993 Taylor III Lance Taylor Central Bankers, Inflation, and the Next Recession, in: Institute for New Economic Thinking (03/09/19), URL: http://www.ineteconomics.org/perspectives/blog/central-bankers-inflation-and-the-next-recession 9/3/2019 TaylorB II Barry Taylor "States of Affairs" In Truth and Meaning, G. Evans/J. McDowell, Oxford 1976 TaylorCh I Charles Taylor The Language Animal: The Full Shape of the Human Linguistic Capacity Cambridge 2016 Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018 |
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