Economics Questions

Re: On Negative Real Interest Rates, Taylor Rule.

krazy kaju — Sat, 21 Mar 2009 15:31:45 GMT

The Taylor rule is pure Keynesian and monetarist humbug. It proposes that the central bank have a target for economic growth and inflation. When inflation is above the target, along with employment and economic growth, the central bank should raise interest rates. When inflation, employment, and economic growth are below the target, the central bank should ease monetary policy. It's basically monetary Keynesianism; it simply deals with aggregate demand and aggregate supply. The Taylor rule is better than Greenspan-esque monetary policy, but still far from perfect. It still can throw us into a stagflationary situation, which is impossible according to the Taylor rule.

Here is Taylor speaking about the Taylor rule.

Re: On Negative Real Interest Rates, Taylor Rule.

nirgrahamUK — Sat, 21 Mar 2009 13:19:51 GMT

the article you linked to doesnt have him advocate anything, and does not include the graph you posted

On Negative Real Interest Rates, Taylor Rule.

MatthewWilliam — Sat, 21 Mar 2009 05:26:30 GMT

I read a WSJ article by a guy named John Taylor. He puts the blame for the current crisis on the Fed for keeping interest rates too low during 2003-2005. But now he advocates that the Fed should shoot for negative interest rates (-6%).

What would happen if such a policy were adopted? Are there problems with the Taylor rule?