This is a 20 to 25 pages double-space Capstone paper, you have to do some research on the Tylor Rule and know how to run linear regression.
The proposal for this assignment is:
Detailed objective:
In my capstone, I decided to conduct a further empirical study based on the existing theoretical research on Taylor Rule in China. In this paper, the coefficients obtained from the regression results of several models are put into the Taylor Rule. Then the difference between the predicted value of interest rate in the last two years (2020 and 2021) and the comparison results of the actual value is obtained to empirically test whether the Taylor Rule is effectively applied in China’s monetary policy.
The added value of the capstone:
This study can also consider how to improve the statistical accuracy of China’s output gap data, reduce the deviation in the process of Taylor Rule, and enhance the positive influence of Taylor Rule on China’s monetary policy operation by calculating and judging the results.
Data to be used in the capstone:
– Source(s): This paper mainly uses data sources from Chinese university doctoral dissertations, Chinese and English economic and financial research papers, etc.
– Countries: China
– Dates: 2001-2021
Analytical framework:
I will use the quarterly data from 2001 to 2021 to test whether China’s monetary policy is in line with its operation through the Taylor Rule model and analyze the proposal, development, and foresight of the Taylor Rule. Then I will calculate the answer through the regression coefficient equation and compare the actual ratios of different years to determine whether the Taylor Rule is reflected in China’s monetary policy. Finally, I will discuss the limitations and accuracy of China’s current application of the Taylor Rule and put forward corresponding suggestions.
Anticipated results:
It turns out that the Taylor Rule has not been applied to monetary policy in China because the predicted interest rates in the last two years (2020 and 2021) are quite different from the actual values.
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