I think many of you missed another bad move by our beloved monetarist economist, SW. In this post ( http://bit.ly/1eYYPLK ) he went on saying that lower rates are the problem and all that crap he and 12 cent dude are repeating.
Then Lars Svensson directly commented the post saying:
Here is some info:
The model used for the counterfactual experiment is the Riksbank's standard empirical DSGE model, Ramses. There is an update of the experiment here, including 2013: http://larseosvensson.se/2014/02/06/ekonomistas-unemployment-and-monetary-policy-update-for-the-year-2013/ .
The red lines show the actual outcome. The blue lines show the counterfactual outcome.By the way: I am not advocating using a Taylor rule. Instead I prefer "forecast targeting", that is, setting a policy rate and a policy-rate path such that the corresponding forecasts of inflation and unemployment "look good," meaning that they best stabilize inflation around the target and unemployment around a long-run sustainable rate.
There is much on this on my website, larseosvensson.se. A recent paper on lessons from my 6 years of policymaking is this: http://larseosvensson.se/files/papers/Svensson-paper--Some-lessons-from-six-years-of-practical-inflation-targeting.pdf .
Best regards,
Lars E.O. Svensson