Figure 1
The vertical axis is labeled “Rate”, ranging from 0.00 to 15.00 in increments of 5.00 units. The horizontal axis shows a continuous sequence of observations from left to right. The legend includes “Actual Federal Funds Rate” shown as a solid line, “Taylor Rule-Hodrick-Prescott” shown as a solid lighter line, “Taylor Rule-Christiano-Fitzgerald” shown as a dotted line, and “Taylor Rule by Exponential Regression” shown as a dashed line. The solid line “Actual Federal Funds Rate” begins around 8.5, fluctuates near 9.0 to 10.0, declines to around 3.0, rises again to 6.0, and then drops to end at 1.0. The solid lighter line “Taylor Rule-Hodrick-Prescott” starts near 6.5, increases to around 9.0, declines to 4.0, and rises again near 6.5, and ends near 4.0. The dotted line“Taylor Rule-Christiano-Fitzgerald” starts near 6.0, peaks around 9.5, declines to about 3.5, rises again near 6.5, and ends around 4.0. The dashed line “Taylor Rule by Exponential Regression” begins near 9.0, peaks around 10.0, declines to 6.5, rises again near 8.0, and ends around 5.5. All series show multiple fluctuations over time with peaks and dips at similar intervals. Note: All numerical data values are approximated.Actual vs policy rule in rules-based period. Source(s): Author’s own calculation