Emi Nakamura on Central Bank Credibility and the Taylor Rule

In this episode of the Odd Lots podcast, hosts Tracy Alloway and Joe Weisenthal interview Emi Nakamura, a professor at Berkeley, about her paper "Beyond the Taylor Rule," presented at Jackson Hole. The discussion explores the Taylor Rule's historical context, its shift from descriptive to prescriptive monetary policy, and its relevance in the post-COVID economic landscape. Nakamura argues that the Taylor Rule, based on a limited historical period, may not always be the best guide for monetary policy, especially when dealing with supply-side shocks versus demand-driven inflation. The conversation further explores the importance of central bank credibility, forward guidance, and the challenges policymakers face in identifying and responding to different types of economic shocks in real-time.