SAO PAULO | By Marcus Nunes via Historinhas | That´s what Simon Wren-Lewis does in “Taylor Rules, the ZLB and Euro Diversity”: John Taylor originally suggested his rule as both a good guide to what central banks actually do and also one that “captures the spirit of the recent research”. It has been used ever since as a yardstick by which to measure monetary policy.
SAO PAULO | By Marcus Nunes | Five years ago, the former Treasury official who created the “Taylor Rule,” a formula for rate- setting based on the outlook for inflation and growth said that “the Federal Reserve may soon need to raise interest rates”. Five years later, economist Scott Sumner affirmed that “promising year after year of near zero rates is like promising year after year of sub-par nominal growth”. Five years on the “winning prediction” is obvious.