In his latest blogpost, John Taylor says it is prescriptive. People wrongly think it is descriptive as in explains a historic event:
Misunderstandings about whether a particular rule is meant to be descriptive or prescriptive can thus lead to policy mistakes. Consider this passage from the March 18, 2011 issue of JP Morgan’s Global Data Watch (p 16): “The original Taylor rule was descriptive and meant to match how Fed policy was set in the 1987-1992 period. Subsequently, some researchers found that variants of Taylor rules were optimal in certain economic models, and so could also be prescriptive. However, those classes of models were usually quite restrictive, such as assuming policy was not at the zero bound, or that the central bank only tried to influence the short end of the curve. In fact, very few optimal policy models even incorporate multi-period interest rates.”
Hmm. In his class he clarifies the point:
When teaching Economics 1, I stress the difference between positive (descriptive) economics and normative (prescriptive) economics. This discussion of policy rules illustrates the importance of understanding the difference in practice. You can’t justify QE2 by saying that the interest rate is negative with the prescriptive policy rule I proposed, because the implied rate is not negative, it’s close to 1 percent.