Inflation-targeting monetary policy has failed in West

Financial deregulation is pilloried as the villain that ignited the global financial crisis. But John B Taylor of Stanford has argued that one of the factors was loose monetary policy in the US and deviated from his celebrated rule. This appears to have been the case after the dotcom bust of 2000, as the accompanying table indicates. US' potential GDP is assumed to be 3.5%, and the core inflation target as 2%.

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