The 19  See Kiley and Roberts (2017); Reifschneider (2016) See Cecchetti & Schoenholtz (2016). 21 ∗ They use 2 1.5 2 22 For an estimated rule for the period 1960‐2007, equal to 0.9 1 0.2 0.15 0.25∆ , the results for the FRB/US model 31.7%, 2 years, 1.3 p.p.
below potential GDP and inflation at 1.2% 23 ∗ 2 1.5 2 20  6  introduction of the risk adjustment creates, of course, the risk of inflation being above 2% during some protracted periods. Another attempt is to use a Taylor Rule specified in terms of interest rate changes instead of levels24, which improves the performance of both models.