Taylor Rules: the ‘Keynes and the Classics' Debate goes on

At face value, Taylor’s Rule has the appearance of a useful macroeconomic policy instrument. Closer inspection reveals a derivative restatement of the loanable funds theory of interest rate determination and the expectations-augmented Phillips’ curve. By its reassertion of classical principles, Taylor’s Rule embodies disaffection with Keynesian macro-management, but an amended ‘pseudo-Rule’ reasserts Keynesian practice. So, the ‘Keynes and the Classics’ debate goes on..