Consider the following Taylor rule for Country Z. r = 0.01 + 0.5((y-y*)/y*...
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Consider the following Taylor rule for Country Z.
r = 0.01 + 0.5((y-y*)/y*) + 0.5π
Where r is the real interest rate, is the rate of inflation, and
Assume that interest rates follow the Taylor rule. Calculate the value of
| y | π | y* |
|
|
2018 | 510 | 4% | 500 |
|
|
(Use the inflation rate in decimal form in the Taylor rule. Note that the interest rate in the Taylor rule is expressed in decimal form, multiply it by 100 to get it to a percentage.)
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