Measuring Real Equilibrium Interest Rate: From the Linear Equation of the Taylor Rule to Agent - Based Model
Journal Title: Journal of Economics, Management and Trade - Year 2017, Vol 16, Issue 3
Abstract
The aim of this paper is to transform standard Taylor rule linear equation model into agent-based computational (ABC) model. ABC model addresses monetary macroeconomics as a complex evolving system of heterogenous agents whose interactions continuously change the structure of the system. Our ABC methodology extend the Taylor rule-based model with macroeconomic and global factors that account for the variability of the equilibrium interest rate and for the deviations of the actual federal funds rate from the interest rates implied by the Taylor rule. As a result we compared two models and identified that ABC model allows to better understand forward looking equilibrium interest rate dynamics comparatively to Taylor’s mathematically determined 2% steady state equilibrium interest rate.
Authors and Affiliations
Alexander Dedishchev
Keywords
Related Articles
- EP ID EP320029
- DOI 10.9734/BJEMT/2017/31353
- Views 133
- Downloads 0
Strategic Agility and Competitive Advantage: Exploration of the Ontological, Epistemological and Theoretical Underpinnings
This paper aims and seeks to explore the question of ontological and epistemological foundations of the major constructs in the study – strategic agility and competitive advantage - by reviewing relevant literature on re...
A Comparative Analysis of Corporate Social Responsibility Practices in the Banking Industry: The Case of Ghana and China
Corporate Social Responsibility has become the norm and among the well accepted practices of organizations in the 21st Century. Even though it is not mandatory in most countries, the society has made it morally unaccepta...
Role of the FIIs in the Development of the Indian Stock Market: An Econometric Analysis
The stock market of a country operates in the economy of that country and the economic conditions of the country affect the stock prices of the stocks listed in the stock exchanges of the country. And it is believed that...
Impact of Credit Risk Management on the Profitability of Selected Commercial Banks Listed on the Ghana Stock Exchange
Effective credit risk management is very important to the health of banks because it has the possibility of either ruining or ensuring the sustenance and growth of the bank. This study assessed the impact of credit risk...
Interest Rate and Investment in Money Market Instruments in a Developing Economy: A Case of Nigeria
The relationship between interest rate and investment has been a largely discussed and controvertible one across different economic climes. It is in the light of this that this work was set out to investigate the influen...