Reflections on the failure of the Taylor principle under commitment
AbstractWe offer an explanation of why optimal policy under commitment requires weaker reaction to supply shock, reflected in the failure of the Taylor principle. This lesson seems to be prevalent among central banks and yet has been analyzed incomprehensively in the economic literature.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 112 (2011)
Issue (Month): 1 (July)
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Web page: http://www.elsevier.com/locate/ecolet
Taylor principle Discretion Commitment;
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