Policy rules around 2003 Some of the ambiguities and potential pitfalls in the use of simple policy rules are highlighted by considering their prescriptions for a period earlier in this decade.
Turning to Figure 1B, the solid line indicates the actual federal funds rate between the first quarter of 1993 and the second quarter of 2007, and the dashed line shows the prescriptions of the Taylor rule using the same methodology that John used in his Jackson Hole remarks this year.