Discuss the coefficients on the inflation gap and output gap terms in the Taylor rule given in the equation below .

Hi

Need help with the following question:

Discuss the coefficients on the inflation gap and output gap terms in the Taylor rule given in the equation below . If you could change the relative importance of the coefficients, what would you choose?

Target fed funds rate = 2 + Current inflation + 1/2 (Inflation gap) + 1/2 (Output gap)

Thanks

"Get 15% discount on your first 3 orders with us"
Use the following coupon
"FIRST15"

Order Now