Question

How has the united states monetary policy compared with the taylor rule over the years of 1985 through 2008?

Answer 1

Without a formal commitment to the Taylor rule, the Taylor rule has tracked the Federal Reserve's actions better than the output gap or inflation rate on their own. Many actions of the Federal Reserves eventually led to the Economic crisis in 2008, in which the price in housing markets fell and traped many american people in massive debts.