The Taylor (1993) rule calls for the federal funds rate to begin rising in early 2013, whereas the Taylor (1999) rule has its liftoff in early 2015, a lot closer to the optimal control path. A sizable literature has examined the performance of simple rules like these by conducting stochastic simulations with a range of economic models.
Many studies, including Taylor’s own analysis, suggest that the Taylor (1999) rule generates considerably less variability in real activity and only slightly more variability in inflation than his original rule.16 Given the differential responses to economic slack across these two rules, this finding is hardly surprising, but it is a key reason why I consider the Taylor (1999) rule to be a more suitable guide for Fed policy.