  I have analyzed the practicality of the Evans Rule in the state based forward
guidance and possible ways to reform it. I examined the biases, measurement
errors, and other limitations extant in the unemployment and the inflation rate
in the Evans Rule. Using time series analysis, I calibrated the thresholds of
ECI wage growth and the employment to population ratio and investigated the
relationship between other labor utilization variables. Then I imposed various
shocks and constructed impulse response functions to contrast the paths of
eight macroeconomic variables under three scenarios. The results suggest that
under the wage growth rate scenario, the federal funds rate lift off earlier
than under the current Evans Rule.
