Reaction functions such as the Taylor rule work better in theory, Axel Merk notes

Reaction functions such as the Taylor rule work better in theory, Axel Merk notes
Reaction functions lack real economy precision

Axel Merk questions the practicality of using reaction functions such as the Taylor rule to understand the economy.

He observes that while these models work better in controlled environments, their effectiveness in real-world economic settings has not yet achieved the desired level of precision.

Merk has previously commented on major market events. He noted that gold prices surged after the Treasury Twist announcement, citing a signaling effect in the market. In a separate analysis, Merk said China is working to boost its currency’s presence in global trade by building supporting infrastructure (link).

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