Soft landing in a Markov-switching economy
AbstractWe analyse the monetary policy implications of boom-bust cycles in asset prices using a Markov-switching rational expectations model. In our simulations, when a bubble bursts, the Taylor rule fails to achieve a soft landing, contrary to the optimal policy.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 107 (2010)
Issue (Month): 2 (May)
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Web page: http://www.elsevier.com/locate/ecolet
Asset prices Monetary policy Markov-switching;
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