Taylor’s Rule: How John B. Taylor Condensed a Mass of Complicated Theory about Monetary Policy into a Single Equation

Publication Date: January 2008

Publisher: Hoover Institution on War, Revolution, and Peace; International Monetary Fund

Author(s): John B. Taylor; Prakash Loungani

Research Area: Economics

Keywords: Economy; John B. Taylor; The Taylor Rule

Type: Report

Coverage: United States

Abstract:

The Taylor rule is a simple equation that Hoover senior fellow and Stanford economist John B. Taylor propounded in 1992 to describe the response of the Fed’s interest-rate target to inflation and business cycles. Now it has been celebrated; a conference on “John Taylor’s Contributions to Monetary Theory and Policy” was held at the Federal Reserve Bank of Dallas in October 2007.

This article chronicles Taylor's economic studies from his undergraduate years at Princeton in the mid-1960s to his works at Stanford and as an economic adviser to the Republicans in present-day 2008.