February 27, 2017

Trump is on the Money on US Fed

Senior Resident Fellow Vivek Deheija on the need for the US Fed to move away from unconventional monetary policies towards fixed, rule-based inflation targeting. 


"This is not the place to rehearse the varied and boisterous academic debate on the merits, or otherwise, of the Taylor rule or of other rule-based approaches to monetary policy. What is most relevant for our purpose is the willingness to consider a departure from the doctrine, one might even say dogma, of discretionary monetary policy—albeit a policy which, in principle, has a rule-based objective (an inflation target) rather than a rule-based instrument (for instance, a Taylor rule)."


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