Tim Duy posted a graph of various rules to determine the base nominal interest of the Federal Reserve. Here is the graph that he posted. (link)

The graph includes versions of the Taylor rule and the modified Taylor rule used by Glenn Rudebusch at the Federal Reserve Bank of San Francisco.

Now I will overlay my effective demand rule (orange line) on top of his graph. (link to equation)

The effective demand rule tracks a similar path to the other rules. The other rules use the output gap (Taylor) and the unemployment gap (Rudebusch). The ED rule compares the composite utilization of labor and capital (TFUR) against the effective labor share.

Currently, the Rudebusch rule is giving the same Fed rate as my Effective Demand rule.

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