Real-time Taylor rules and the federal funds futures market. (economist John Taylor)

From: Economic Perspectives | Date: September 22, 1998| Author: | Copyright information

The futures funds rate has been used as a major tool for formulating monetary policies since 1982. This rate relies on data provided by the Federal Open Market Committee (FOMC). Economist John Taylor presented models describing the FOMC's method of assigning federal funds rate. The model predicted the policy patterns from 1987 to 1992 with reasonable accuracy. However, a further refinement on the model could be achieved by using real-time data from the unemployment statistics and the Consumer Price Index.

Introduction and summary

The Federal Reserve Act (as amended by the Full Employment ...

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