interest rate in Talor rule is considered as endogenous or exogenous? Similarly there are some fiscal policy rules in assuming fiscal instrumens like government expenditure and distortionary taxes react to debt and GDP. While specifying this in DSGE government expenditure and taxes are considered as endogenous or exogenous?

  • $\begingroup$ Please post separate questions as separate questions. Also adding more details would not hurt. $\endgroup$ – Giskard Jan 23 '17 at 16:27

The Taylor rule links the interest rate to other variables (usually inflation), which are determined by the model (hence, endogenous). Therfore, it is endogenous.

Similarly government expenditure. If it is pinned down (partially) by factors determined in the model, it is endogenous.

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