An amusing graph by Krugman, with even more amusing assumptions.
It is called the FedFail index, and shows how far core economic indicators (inflation and employment) are from the Fed's targets. It is calculated by "1.3* ABS(unemployment – 5) + 2* ABS(core inflation – 2)." And looks like:
Having read through Rudebusch (San Fran Reserve)'s letter, I understand very roughly were Paul is getting the weightings of 1.3 and 2 for inflation and employment. But there is clearly a value judgement implicit in these weighting - i.e. employment more important than inflation. An unsurprising value judgement given Paul's politics perhaps, but something to be leery of.
Additionally, it is likely that the target for inflation and employment at the Fed has shifted - and it seems clear that they are more interested in reigning in inflation than employment.
If I get truely bored this weekend I might try to knock one of these up for Australia, see how we stack up.
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