John Brian Taylor (born December 8, 1946) is the Mary and Robert Raymond Professor of Economics at Stanford University, and the George P. Shultz Senior Fellow in Economics at Stanford University's Hoover Institution.
Born in Yonkers, New York, he graduated from Shady Side Academy and earned his A.B. from Princeton University in 1968 and Ph.D. from Stanford in 1973, both in economics. He taught at Columbia University from 1973–1980 and the Woodrow Wilson School and Economics Department of Princeton University from 1980–1984 before returning to Stanford. He has received several teaching prizes and teaches Stanford's introductory economics course as well as Ph.D. courses in monetary economics.
In research published in 1979 and 1980 he developed a model of price and wage setting—called the staggered contract model—which served as an underpinning of a new class of empirical models with rational expectations and sticky prices—sometimes called new Keynesian models. In a 1993 paper he proposed the Taylor rule, intended as a recommendation about how nominal interest rates should be determined, which then became a rough summary of how central banks actually do set them. He has been active in public policy, serving as the Under Secretary of the Treasury for International Affairs during the first term of the George W. Bush Administration. His book Global Financial Warriors chronicles this period. He was a member of the President's Council of Economic Advisors during the George H. W. Bush Administration and Senior Economist at the Council of Economic Advisors during the Ford and Carter Administrations.
In 2012 he was included in the 50 Most Influential list of Bloomberg Markets Magazine. Thomson Reuters lists Taylor among the 'citation laureates' who are likely future winners of the Nobel Prize in Economics.
|Under Secretary of the Treasury for International Affairs|
|President||George W. Bush|
|Preceded by||Timothy Geithner|
|Succeeded by||Timothy D. Adams|
John Brian Taylor
December 8, 1946
Yonkers, New York, U.S.
|Education||Princeton University (BA)|
Stanford University (PhD)
|New Keynesian economics|
|Theodore Wilbur Anderson|
|Lawrence J. Christiano|
E. Philip Howrey
|Information at IDEAS / RePEc|
Taylor’s research—including the staggered contract model, the Taylor rule, and the construction of a policy tradeoff (Taylor) curve employing empirical rational expectations models—has had a major impact on economic theory and policy. Former Federal Reserve Chairman Ben Bernanke has said that Taylor's “influence on monetary theory and policy has been profound,” and Federal Reserve Chair Janet Yellen has noted that Taylor's work “has affected the way policymakers and economists analyze the economy and approach monetary policy."
Taylor contributed to the development of mathematical methods for solving macroeconomic models under the assumption of rational expectations, including in a 1975 Journal of Political Economy paper, in which he showed how gradual learning could be incorporated in models with rational expectations; a 1979 Econometrica paper in which he presented one of the first econometric models with overlapping price setting and rational expectations, which he later expanded into a large multicountry model in a 1993 book Macroeconomic Policy in a World Economy, and a 1983 Econometrica paper, in which he developed with Ray Fair the first algorithm to solve large-scale dynamic stochastic general equilibrium models which became part of popular solution programs such as Dynare and EViews.
In 1977, Taylor and Edmund Phelps, simultaneously with Stanley Fischer, showed that monetary policy is useful for stabilizing the economy if prices or wages are sticky, even when all workers and firms have rational expectations. This demonstrated that some of the earlier insights of Keynesian economics remained true under rational expectations. This was important because Thomas Sargent and Neil Wallace had argued that rational expectations would make macroeconomic policy useless for stabilization; the results of Taylor, Phelps, and Fischer showed that Sargent and Wallace's crucial assumption was not rational expectations, but perfectly flexible prices. These research projects together could considerably deepen our understanding of the limits of the policy-ineffectiveness proposition.
Taylor then developed the staggered contract model of overlapping wage and price setting, which became one of the building blocks of the New Keynesian macroeconomics that rebuilt much of the traditional macromodel on rational expectations microfoundations.
Taylor’s research on monetary policy rules traces back to his undergraduate studies at Princeton. He went on in the 1970s and 1980s to explore what types of monetary policy rules would most effectively reduce the social costs of inflation and business cycle fluctuations: should central banks try to control the money supply, the price level, or the interest rate; and should these instruments react to changes in output, unemployment, asset prices, or inflation rates? He showed that there was a tradeoff—later called the Taylor curve—between the volatility of inflation and that of output. Taylor's 1993 paper in the Carnegie-Rochester Conference Series on Public Policy proposed that a simple and effective central bank policy would manipulate short-term interest rates, raising rates to cool the economy whenever inflation or output growth becomes excessive, and lowering rates when either one falls too low. Taylor's interest rate equation has come to be known as the Taylor rule, and it is now widely accepted as an effective formula for monetary decision making.
A key stipulation of the Taylor rule, sometimes called the Taylor principle, is that the nominal interest rate should increase by more than one percentage point for each one-percent rise in inflation. Some empirical estimates indicate that many central banks today act approximately as the Taylor rule prescribes, but violated the Taylor principle during the inflationary spiral of the 1970s.
Taylor's recent research has been on the financial crisis that began in 2007 and the world economic recession. He finds that the crisis was primarily caused by flawed macroeconomic policies from the U.S. government and other governments. Particularly, he focuses on the Federal Reserve which, under Alan Greenspan, a personal friend of Taylor, created "monetary excesses" in which interest rates were kept too low for too long, which then directly led to the housing boom in his opinion. He also believes that Freddie Mac and Fannie Mae spurred on the boom and that the crisis was misdiagnosed as a liquidity rather than a credit risk problem. He wrote that, "government actions and interventions, not any inherent failure or instability of the private economy, caused, prolonged, and worsen the crisis."
Taylor’s research has also examined the impact of fiscal policy in the recent recession. In November 2008, writing for The Wall Street Journal opinion section, he recommended four measures to fight the economic downturn: (a) permanently keeping all income tax rates the same, (b) permanently creating a worker's tax credit equal to 6.2 percent of wages up to $8,000, (c) incorporating "automatic stabilizers" as part of overall fiscal plans, and (d) enacting a short-term stimulus plan that also meets long term objectives against waste and inefficiency. He stated that merely temporary tax cuts would not serve as a good policy tool. His research with John Cogan, Tobias Cwik, and Volcker Wieland showed that the multiplier is much smaller in new Keynesian than in old Keynesian models, a result that was confirmed by researchers at central banks. He evaluated the 2008 and 2009 stimulus packages and argued that they were not effective in stimulating the economy.
In a June 2011 interview on Bloomberg Television, Taylor stressed the importance of long term fiscal reform that sets the U.S. federal budget on a path towards being balanced. He cautioned that the Fed should move away from quantitative easing measures and keep to a more static, stable monetary policy. He also criticized fellow economist Paul Krugman's advocacy of additional stimulus programs from Congress, which Taylor said will not help in the long run. In his 2012 book First Principles: Five Keys to Restoring America’s Prosperity, he endeavors to explain why these reforms are part of a broader set of principles of economic freedom.
| Under Secretary of the Treasury for International Affairs
Timothy D. Adams
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Milton Friedman coauthored a book with Anna Schwartz to summarise a historical analysis of monetary policy, called A Monetary History of the United States, 1867–1960. The book attributed inflation to excess money supply generated by a central bank. It attributed deflationary spirals to the reverse effect of a failure of a central bank to support the money supply during a liquidity crunch. Friedman proposed a fixed monetary rule, called Friedman's k-percent rule, where the money supply would be calculated by known macroeconomic and financial factors, targeting a specific level or range of inflation.
Under this rule, there would be no leeway for the central reserve bank, as money supply increases could be determined "by a computer" and therefore business could anticipate all monetary policy decisions.Guillermo Calvo
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He published significant research in macroeconomics, especially monetary economics and the economics of emerging markets and transition economies.Hoover Institution
The Hoover Institution on War, Revolution, and Peace is an American public policy think tank and research institution located at Stanford University in California. It began as a library founded in 1919 by Republican and Stanford alumnus Herbert Hoover, before he became President of the United States. The library, known as the Hoover Institution Library and Archives, houses multiple archives related to Hoover, World War I, World War II, and other world history. According to the 2016 Global Go To Think Tank Index Report (Think Tanks and Civil Societies Program, University of Pennsylvania), Hoover is No. 18 (of 90) in the "Top Think Tanks in the United States".The Hoover Institution is a unit of Stanford University but has its own board of overseers. It is located on the campus. Its mission statement outlines its basic tenets: representative government, private enterprise, peace, personal freedom, and the safeguards of the American system. The institution is generally described as conservative, although directors and others associated with it assert that the institution is nonpartisan, as its primary goal is to "promote economic opportunity and prosperity, while securing and safeguarding peace for America and all mankind."The institution has been a place of scholarship for individuals who previously held high-profile positions in government, such as George Shultz, Condoleezza Rice, Michael Boskin, Edward Lazear, John B. Taylor, Edwin Meese, and Amy Zegart—all Hoover Institution fellows. In 2007, retired U.S. Army General John P. Abizaid, former commander of the U.S. Central Command, was named the Institution's first annual Annenberg Distinguished Visiting Fellow. Former Secretary of Defense General James Mattis served as a research fellow at Hoover before being appointed by the Trump administration.The institution is housed in four buildings on the Stanford campus. The most prominent facility is the landmark Hoover Tower, which is a popular visitor attraction. The tower features an observation deck on the top level that provides visitors with a panoramic view of the Stanford campus and surrounding area. Additionally, the institution has a branch office in the Johnson Center in Washington, DC.International Journal of Central Banking
The International Journal of Central Banking (IJCB) is an economic research journal which began in the 2004 decision of several Central Banks to create a professional journal for policymakers and researchers in the field of monetary policy. In July 2004, the Bank for International Settlements (BIS), the European Central Bank, and each of the Group of Ten (G-10) central banks announced their plans to support the development of a new publication focused on central bank theory and practice. Other central banks were invited to participate in this joint project, and there are now some 50 sponsoring institutions.
The primary objectives of the IJCB are to widely disseminate the best policy-relevant and applied research on central banking and to promote communication among researchers both inside and outside of central banks.
Federal Reserve Vice Chairman Roger W. Ferguson Jr. first proposed the idea of such a journal and discussed the concept with several BIS colleagues and with Federal Reserve Board Governor Ben S. Bernanke, who served as the initial managing editor. John B. Taylor, Professor of Economics at Stanford University, was appointed managing editor in September 2005. Frank Smets of the European Central Bank became managing editor in January 2008. John Williams of the Federal Reserve Bank of San Francisco took over as managing editor in January 2011. Bank of England Chief Economist Charlie Bean strongly supported the project, and the journal's governing body, comprising representatives from the sponsoring institutions, was established.
John Williams now serves as managing editor along with six co-editors: Douglas Gale, Harrison Hong, Rafael Repullo, Giancarlo Corsetti, Andrew Levin, and Carl Walsh. A group of associate editors work along with the journal's managing editor and co-editors to coordinate solicitation and review of articles across a range of disciplines reflecting the missions of central banks around the world. While featuring policy-relevant articles on any aspect of the theory and practice of central banking, the publication has a special emphasis on research bearing on monetary and financial stability.
The IJCB is a free publication available for download from the IJCB web site.James Ignatius Taylor
Rev. Dr. James Ignatius Taylor BA(London) DD(Rome) MRIA, was an Irish Priest, Educator and ecclesiastic.
James Ignatius Taylor was born at Gardiner's Place, Dublin in July 1805, to Joseph and Anne Taylor. In 1822 he went to study at St. Patrick's, Carlow College, his older brother Rev. John B. Taylor who had studied in Paris was a Professor in the College, and James was ordained on 28 May 1831 to the priesthood and was appointed Bursar of the College and in 1834 he was appointed Vice-President. He also served as Professor of Sacred Scripture. In 1841 Rev. Taylor was awarded a BA from the University of London which Carlow was affiliated to. In 1843 he became president of St. Patrick's, Carlow College holding the position until 1850. Whilst President of the College he on a visit to Rome, he was awarded the degree of Doctor in Theology(DD) and in 1848 Dr. Taylor was elected a member of the Royal Irish Academy. On 2 June 1847, he bought the farm and 127acres of Knockbeg and founded St. Marys (Knockbeg College) as a preparatory School for Carlow College.
Leaving Carlow College he moved to Dublin and joined the Vincentians, he became Secretary to the Archbishop of Dublin in January 1853 became Secretary of the Catholic University of Ireland.
He also served as Parish Priest of Rathvilly, Co. Carlow, later of Maryborough, Portlaoise, Co Laois He died in the Parochial house, Maryborough where he was Parish Priest for twenty years, on 5 February 1875.John Taylor (athlete)
John Baxter Taylor Jr. (November 3, 1882, Washington, D.C. – December 2, 1908, Philadelphia, Pennsylvania) was an American track and field athlete, notable as the first African American to win an Olympic gold medal.Macroeconomics
Macroeconomics (from the Greek prefix makro- meaning "large" + economics) is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study aggregated indicators such as GDP, unemployment rates, national income, price indices, and the interrelations among the different sectors of the economy to better understand how the whole economy functions. They also develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, saving, investment, international trade, and international finance.
While macroeconomics is a broad field of study, there are two areas of research that are emblematic of the discipline: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income). Macroeconomic models and their forecasts are used by governments to assist in the development and evaluation of economic policy.
Macroeconomics and microeconomics, a pair of terms coined by Ragnar Frisch, are the two most general fields in economics. In contrast to macroeconomics, microeconomics is the branch of economics that studies the behavior of individuals and firms in making decisions and the interactions among these individuals and firms in narrowly-defined markets.New Keynesian economics
New Keynesian economics is a school of contemporary macroeconomics that strives to provide microeconomic foundations for Keynesian economics. It developed partly as a response to criticisms of Keynesian macroeconomics by adherents of new classical macroeconomics.
Two main assumptions define the New Keynesian approach to macroeconomics. Like the New Classical approach, New Keynesian macroeconomic analysis usually assumes that households and firms have rational expectations. However, the two schools differ in that New Keynesian analysis usually assumes a variety of market failures. In particular, New Keynesians assume that there is imperfect competition in price and wage setting to help explain why prices and wages can become "sticky", which means they do not adjust instantaneously to changes in economic conditions.
Wage and price stickiness, and the other market failures present in New Keynesian models, imply that the economy may fail to attain full employment. Therefore, New Keynesians argue that macroeconomic stabilization by the government (using fiscal policy) and the central bank (using monetary policy) can lead to a more efficient macroeconomic outcome than a laissez faire policy would.Pavlina R. Tcherneva
Pavlina R. Tcherneva is an American economist, of Bulgarian descent, working as associate professor and director of the Economics program at Bard College. She is also a research associate at the Levy Economics Institute and expert at the Institute for New Economic Thinking.Post-Keynesian economics
Post-Keynesian economics is a school of economic thought with its origins in The General Theory of John Maynard Keynes, with subsequent development influenced to a large degree by Michał Kalecki, Joan Robinson, Nicholas Kaldor, Sidney Weintraub, Paul Davidson, Piero Sraffa and Jan Kregel. Historian Robert Skidelsky argues that the post-Keynesian school has remained closest to the spirit of Keynes' original work. It is a heterodox approach to economics.Richard Clarida
Richard Harris Clarida (born May 18, 1957) is an American economist and Vice Chairman of the Federal Reserve. He is the C. Lowell Harriss Professor of Economics and International Affairs at Columbia University and, until September 2018, Global Strategic Advisor for PIMCO. He is notable for his contributions to dynamic stochastic general equilibrium theory and international monetary economics. He is a former Assistant Secretary of the Treasury for Economic Policy and is a recipient of the Treasury Medal.Taylor contract (economics)
The Taylor contract or staggered contract was first formulated by John B. Taylor in his two articles, in 1979 "Staggered wage setting in a macro model'. and in 1980 "Aggregate Dynamics and Staggered Contracts". In its simplest form, one can think of two equal sized unions who set wages in an industry. Each period, one of the unions sets the nominal wage for two periods (i.e. it is constant over the two periods). This means that in any one period, only one of the unions (representing half of the labor in the industry) can reset its wage and react to events that have just happened. When the union sets its wage, it sets it for a known and fixed period of time (two periods). Whilst it will know what is happening in the first period when it sets the new wage, it will have to form expectations about the factors in the second period that determine the optimal wage to set. Although the model was first used to model wage setting, in new Keynesian models that followed it was also used to model price-setting by firms.
The importance of the Taylor contract is that it introduces nominal rigidity into the economy. In macroeconomics if all wages and prices are perfectly flexible, then money is neutral and the classical dichotomy holds. In previous Keynesian models, such as the IS–LM model it had simply been assumed that wages and/or prices were fixed in the short-run so that money could affect GDP and employment. John Taylor saw that by introducing staggered or overlapping contracts, he could allow some wages to respond to current shocks immediately, but the fact that some were set one period ago was enough to introduce a dynamics into wages (and prices). Even if there was a one off shock to the money supply, with Taylor contracts it will set off a process of wage adjustment that will take time to react during which output (GDP) and employment can differ from the long-run equilibrium.Taylor rule
In economics, a Taylor rule is a reduced form approximation of the responsiveness of the nominal interest rate, as set by the central bank, to changes in inflation, output, or other economic conditions. In particular, the rule describes how, for each one-percent increase in inflation, the central bank tends to raise the nominal interest rate by more than one percentage point. This aspect of the rule is often called the Taylor principle. Although such rules may serve as concise, descriptive proxies for central bank policy, they are not explicitly prescriptively considered by central banks when setting nominal rates.
The rule was first proposed by John B. Taylor, and simultaneously by Dale W. Henderson and Warwick McKibbin in 1993.
It is intended to foster price stability by systematically reducing uncertainty and increasing the credibility of future actions by the central bank. It may also avoid the inefficiencies of time inconsistency from the exercise of discretionary policy. The Taylor rule synthesized, and provided a compromise between, competing schools of economics thought in a language devoid of rhetorical passion. Although many issues remain unresolved and views still differ about how the Taylor rule can best be applied in practice, research shows that the rule has advanced the practice of central banking.Trygve Haavelmo
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