Compute the level of the nominal interest rate implied

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Taylor Rule Consider the policy rule employed in the chapter: R-r= m(pit-pi), where we assume r= 2%;m= 1/2, and pi= 2%. Compute the level of the nominal interest rate implied by this rule when the inflation rate takes the following values: 10%, 5%, 2%, and 1%.

Reference no: EM131169414

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