Dollars and Jens
Tuesday, October 13, 2009
taylor rules

it=0.82it-1-0.06+0.21 gt+0.37πt,
with quarterly data, where g is the output gap as estimated by the CBO and π is year-to-year core PCE inflation. This can be rewritten
it=0.82it-1+0.18*(-0.33+1.17 gt+2.05πt), where the last two coefficients are consistent with 1 and 2 if you do the regression.

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