Is it possible for the federal funds rate to be negative

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Glenn Rudebusch, an economist at the Federal Reserve Bank of San Francisco, argues that if the Fed had followed the Taylor rule during the recession of 2007-2009, then by the end of 2009 the target for the federal funds rate would have been -5 percent. Provide values for the Taylor rule equation given on page 875 that would result in a negative target for the federal funds rate. Is it possible for the federal funds rate to be negative?

Reference no: EM131023072

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