Using a simple Taylor Rule with a 2% objective for inflation21 and an equilibrium real rate of 1%, they find that, for the FRB/US model, policy interest rates would be at the ELB 38% of the time with GDP 1.1 percentage points (p.p.) below potential and inflation at 1.2%, so quite a poor performance.
Process and methodology To properly understand the results of the capital assessment program, it is helpful to understand the process that produced the results. All U.S.-owned bank holding companies with year-end 2008 assets exceeding $ billion were required to participate in the program.