As a junior bond trader at Goldman Sachs, you have been asked by your boss to explain the Taylor Rule and how it can be a helpful guide to how the FED sets monetary policy. Write a short report summarizing your findings. Your report should contain the following pieces of information: a.) After 2008, can the FED implement what the Taylor rule prescribes? Why or why not? What can the Fed do to stimulate aggregate demand if the Taylor rule rate is below zero?
b.) How does the current stance (i. e. Q3 2018) of policy in the US compare to what the Taylor rule predicts?