Second, a search procedure is used to solve for the path of the federal funds rate that minimizes the value of an assumed loss function, allowing for feedback of changes in the federal funds rate from baseline to real activity and inflation.
3 Recalibration of global value chains Global value chains experienced considerable change in the 1990s and early 2000s. The reason for this? Rapid globalisation during this period (see Chart 3). The main forces driving this trend were the dismantling of trade barriers, the fall of the Iron Curtain, and China’s integration into the global trading system.