Finding the Equilibrium Real Interest Rate in a Fog of Policy Deviations
John B. Taylor,
For John B. Taylor of Stanford University and Volker Wieland, research on the real equilibrium interest rate is not yet useful for monetary policy although there has been a lot of research recently.
Estimates of equilibrium real interest rates even have been taken into account in policy making. The common finding is that the rate has declined to a level not seen in decades. In their working paper, however, Taylor and Wieland show that the perceived decline may well be due to shifts in regulatory policy and monetary policy that have been omitted from the research. (17.05.16)