Using the dated US inputs in 11.6, compute the Taylor-rule rate for: (i) core PCE, CBO gap, HLW ; (ii) headline CPI, CBO gap, HLW ; (iii) core PCE, LW gap +1.2%, LW 1.65%; (iv) core PCE, CBO gap, Taylor's . For India, add an open-economy term to the rule, with and annual rupee depreciation (assumption). Compute the prescription with CPI 5.54%, and zero gap. Comment on the spread of answers.
M11 · Problem 8 ★★ Check
Taylor rule sensitivity
Answers
Working
Keep your working next to each problem, in markdown with maths: create a free account or sign in.
Solution
Try the problem first. Write down where you got stuck before opening it.