Determine what fed funds rate the policy rule indicates

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Consider a monetary policy rule that has the following parameter values: r ¯ = 2%, m ¯ = 1/2, and π ¯ = 2%. (a) Obtain data on the inflation rate for the most recent 12-month period possible (you should briefly document how and where you obtained the data). Use this rate and the monetary policy rule to determine what fed funds rate the policy rule indicates. (b) How does this rate compare with the current fed funds rate? (c) If they are different, why do you think that’s the case?

Reference no: EM131112819

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