1ro Taylor rule
What is Taylor's rule and what does it say about Federal Reserve monetary policy?
Taylor's rule is a formula developed by Stanford economist John Taylor. It was designed to provide "recommendations" for how a central bank like the Federal Reserve should set short-term interest rates as economic conditions change to achieve both its short-run goal for stabilizing the economy and its long-run goal for inflation.
Specifically, the rule states that the "real" short-term interest rate (that is, the interest rate adjusted for inflation) should be determined according to three factors: (1) where actual inflation is relative to the targeted level that the Fed wishes to achieve, (2) how far economic activity is above or below its "full employment" level, and (3) what the level of the short-term interest rate is that would be consistent with full employment. The rule "recommends" a relatively high interest rate (that is, a "tight" monetary policy) when inflation is above its target or when the economy is above its full employment level, and a relatively low interest rate ("easy" monetary policy) in the opposite situations. Sometimes these goals are in conflict: for example, inflation may be above its target when the economy is below full employment. In such situations, the rule provides guidance to policy makers on how to balance these competing considerations in setting an appropriate level for the interest rate.
Although the Fed does not explicitly follow the rule, analyses show that the rule does a fairly accurate job of describing how monetary policy actually has been conducted during the past decade under Chairman Greenspan. This fact has been cited by many economists inside and outside of the Fed as a reason that inflation has remained under control and that the economy has been relatively stable in the US over the past ten years.
2do Economist
DAVID BECKWORTH directs us to a new Economic letter from the San Francisco Fed's Fernanda Nechio, which examines the appropriateness of euro-zone monetary policy. First, have a look at ECB policy relative to a Taylor rule for the euro-zone as a whole:
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Here it seems as though the ECB is essentially following the Taylor rule (though by this rule, at any rate, the recent increase looks a little unnecessarily aggressive). When one disaggregates the euro data, however, the true absurdity of the current policy becomes clear:
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A few things really stand out here. In the first chart, ECB policy seemed a little loose from 2001 to 2005. From the second chart it's clear what was going on; the ECB stood idly by while the periphery overheated because it was making policy with an eye toward the core nations. Now that the peripheral booms over which the ECB presided have collapsed, the central bank is...continuing to pursue a policy that's most appropriate for the core economies.
Now perhaps the ECB thinks it isn't responsible for managing divergent economic cycles within the euro zone. Indeed, the ECB may well be trying to force core nations to take on this responsibility and move toward closer fiscal union. If the ECB is unsuccessful in winning such progress from core governments, however, we shouldn't be surprised if peripheral economies find euro-zone policy intolerable and—eventually—drop out of the system entirely.
3ro, ya casi de la divulgacion y casi para nerds
Four illegal ways to sort out the Euro finance crisis
Comment Saving the euro isn't the easiest of things: solving the current problems actually would be quite easy, if expensive, except for all the laws and regulations that rule out all of the easy ways.
The basic problem is well explained here. Don't worry too much about what the Taylor Rule is: just accept that if you're going to have a well-functioning currency across an area then the interest rate derived from the Rule should be the same for all the parts of that area.
And Europe, the eurozone, simply fails this test. Interest rates were about right in the boom and are about right now for the eurozone as a whole. But they were waaaaay too low for the periphery (most especially Ireland and Spain) in the boom, and they're similarly way too high for Portugal, Spain, Greece and Ireland now. They're just fine and toasty for France and Germany though: which is the very problem that the currency area faces. Because the different areas are so out of whack, partly for structural reasons, partly because they're on different cycles of boom and bust, the necessarily single interest rate associated with a single currency just won't be right for some areas all of the time.
In the jargon, the question is: "is the eurozone an optimal currency area?" And this result from looking at the Taylor Rule (which is by no means the only such test that gives a negative result) tells us that the answer is "No". Thus the current eurozone should not be the current eurozone; many of the countries that are in it should not be in it.
La duda es;
Si Greesnpan era un mostro, como termino como termino todo, y, si aca la aplicamos (estadisticas mediante) como daria?
Fuentes:
1. http://www.frbsf.org/education/activities/drecon/9803.html
2. http://www.economist.com/blogs/freeexchange/2011/06/europes-europe-crisis
3. http://www.theregister.co.uk/2011/07/22/saving_the_euro/
O sea, Remes, tenes laburo en las Europas, maybe
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