Comments on Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability
نویسندگان
چکیده
منابع مشابه
Backward - Looking Interest - Rate Rules , Interest Rate Smoothing , and Macroeconomic Instability ∗
The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to give rise to aggregate fluctuations due to self-fulfilling expectations. In response to this concern, a growing literature has focused on the stabilizing properties of interest-rate rules whereby t...
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When real balances have even a very small productive role, contemporaneous and forwardlooking Taylor-Wicksell rules can induce ubiquitous multiplicities of equilibria and lead to consequences that are unintended by policymakers. This raises the issue of whether it is possible to anchor and stabilize the economy through backward-looking rules. We show that the standard uniqueness results that ar...
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High degrees of relative risk aversion induce indeterminacy in cashin-advance economies. This paper Þnds that Taylor-style policies can pre-empt such sunspot equilibria. SpeciÞc policy recommendations depend on the fundamentals of the economy, i.e. the empirically true value of coefficient of relative risk aversion. ∗This paper was written while I was aDFG Heisenberg Fellow. I would like to tha...
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The recent macroeconomic literature stresses the importance of managing heterogeneous expectations in the formulation of monetary policy. We use a simple frictionless dynamic stochastic general equilibrium (DSGE) model to investigate inflation dynamics under alternative interest rate rules when agents have heterogeneous expectations, and update their beliefs based on past performance, as in Bro...
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To be added.] ∗This is a revision of the text delivered by the second author as the Jacob Marschak Lecture at the 2001 Far Eastern Meeting of the Econometric Society, Kobe, Japan, July 21, 2001. We thank Julio Rotemberg and Lars Svensson for helpful discussions, and the National Science Foundation, through a grant to the NBER, for research support. Views expressed are those of the authors and d...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2003
ISSN: 1556-5068
DOI: 10.2139/ssrn.1026078