Does equivalent taylor rule become more or less aggressive

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Reference no: EM131221850

Consider the relationship between inflation targeting and Taylor rules.

a. The adjustment of interest rates under inflation targeting is similar to a Taylor rule. Explain why.

b. If a central bank shifts from flexible inflation targeting to strict targeting, does the equivalent Taylor rule become more or less aggressive? (A more aggressive rule responds more strongly to movements in output and inflation.)

Reference no: EM131221850

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