Allow me to quote one last time from the 1992 Kronberger Kreis study – with a wink: “From the point of view of an individual country, the agreed ceilings for deficits and debt levels represent a certain protection against unsound fiscal policies of other members of the union.
This ensures that the real interest rate moves in the right direction to restore price stability. The Taylor principle provides essential guidance for central banks on how to anchor long-run inflation expectations and foster stable growth and low inflation. Ever since its inception, John has emphasized that the Taylor rule should not be applied mechanistically. The world is far too complicated for that.