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Interest Rate Rules and Macroeconomic Stabilization Author info | Abstract | Publisher info | Download info | Related research | Statistics Mark Weder () (School of Economics, University of Adelaide)
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High degrees of relative risk aversion induce indeterminacy in cash- in-advance economies. This paper finds that Taylor-style policies can pre-empt such sunspot equilibria. Specific policy recommendations depend on the fundamentals of the economy, i.e. the empirically true value of coecient of relative risk aversion.
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Paper provided by University of Adelaide, School of Economics in its series Working Papers with number
2006-01.
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Length: 11 pages
Date of creation: Jan 2006Date of revision:
Handle: RePEc:adl:wpaper:2006-01Contact details of provider: Postal: Adelaide SA 5005 Phone: (618) 8303 5540 Web page: http://www.economics.adelaide.edu.au/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Mark Weder).
Keywords: Cash-in-Advance Economies ; Taylor Rules ; Sunspot Equilibria. ; Other versions of this item:
Find related papers by JEL classification: E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Jess Benhabib & Stephanie Schmitt-Grohe & Martin Uribe, 2003.
"Backward-looking interest-rate rules, interest-rate smoothing, and macroeconomic instability ,"
Proceedings ,
Federal Reserve Bank of Cleveland, pages 1379-1423.
Other versions:
Jess Behabib & Stephanie Schmitt-Grohe & Martin Uribe, 2003.
"Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability ,"
NBER Working Papers
9558, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Jess Benhabib & Stephanie Schmitt-Grohe & Martin Uribe, 2003.
"Backward-looking interest-rate rules, interest-rate smoothing, and macroeconomic instability ,"
Working Papers
03-4, Federal Reserve Bank of Philadelphia.
[Downloadable!] Jess Benhabib & Stephanie Schmitt-Grohe & Martin Uribe, 2003.
"Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability ,"
Departmental Working Papers
200304, Rutgers University, Department of Economics.
[Downloadable!] Jess Benhabib & Stephanie Schitt-Grohe & Martin Uribe, 2002.
"Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability ,"
PIER Working Paper Archive
03-005, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 14 Feb 2003.
[Downloadable!] Benhabib, Jess & Schmitt-Grohé, Stephanie & Uribe, Martín, 2003.
"Backward-Looking Interest Rate Rules, Interest Rate Smoothing and Macroeconomic Instability ,"
CEPR Discussion Papers
3928, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Richard Clarida & Jordi Galí & Mark Gertler, 2000.
"Monetary Policy Rules And Macroeconomic Stability: Evidence And Some Theory ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 115(1), pages 147-180, February.
[Downloadable!] (restricted)
Other versions:
Clarida, Richard & Galí, Jordi & Gertler, Mark, 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
CEPR Discussion Papers
1908, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Richard Clarida & Jordi Gali & Mark Gertler, 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
NBER Working Papers
6442, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted) Richard Clarida & Jordi Galí & Mark Gertler, 1997.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory ,"
Economics Working Papers
350, Department of Economics and Business, Universitat Pompeu Fabra, revised May 1999.
[Downloadable!] Clarida, R. & Gali, J. & Gertler, M., 1998.
"Monetary Policy Rules and Macroeconomic Stability: Evidence and some Theory ,"
Working Papers
98-01, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!] Roger E. A. Farmer, 1999.
"Macroeconomics of Self-fulfilling Prophecies, 2nd Edition ,"
MIT Press Books ,
The MIT Press,
edition 2, volume 1, number 0262062038.
Charles T. Carlstrom & Timothy S. Fuerst, 2000.
"Forward-looking versus backward-looking Taylor rules ,"
Working Paper
0009, Federal Reserve Bank of Cleveland.
[Downloadable!]
Charles T. Carlstrom & Timothy J. Fuerst, 1999.
"Forecasts and sunspots: looking back for a better future ,"
Economic Commentary ,
Federal Reserve Bank of Cleveland, issue Nov.
[Downloadable!]
Weder, Mark, 2006.
"Taylor Rules and Macroeconomic Instability or How the Central Bank Can Preempt Sunspot Expectations ,"
Journal of Money, Credit and Banking ,
Blackwell Publishing, vol. 38(3), pages 655-677, April.
[Downloadable!] (restricted)
Stephane Auray & Fabrice Collard & Patrick Feve, 2005.
"Habit Persistence, Money Growth Rule and Real Indeterminacy ,"
Review of Economic Dynamics ,
Elsevier for the Society for Economic Dynamics, vol. 8(1), pages 48-67, January.
[Downloadable!] (restricted)
Mark Weder, 2004.
"Endogenous Monetary Growth Rules and Determinacy in Cash-in-Advance Models ,"
Economics Bulletin ,
Economics Bulletin, vol. 5(11), pages 1-7.
[Downloadable!]
Marc P. Giannoni & Michael Woodford, 2003.
"Optimal Interest-Rate Rules: II. Applications ,"
NBER Working Papers
9420, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions: Christiano, Lawrence J, 2000.
"Comment on Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates ,"
Journal of Money, Credit and Banking ,
Blackwell Publishing, vol. 32(4), pages 905-30, November.
Bennett T. McCallum, 2000.
"Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates ,"
NBER Working Papers
7677, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Bennett T. McCallum, 2000.
"Theoretical analysis regarding a zero lower bound on nominal interest rates ,"
Conference Series ; [Proceedings] ,
Federal Reserve Bank of Boston, pages 870-935.
McCallum, Bennett T, 2000.
"Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates ,"
Journal of Money, Credit and Banking ,
Blackwell Publishing, vol. 32(4), pages 870-904, November.
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Weder, Mark, 2006.
"Sticky Prices and Indeterminacy ,"
CEPR Discussion Papers
5535, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions:
Mark Weder, 2006.
" Sticky Prices and Indeterminacy ,"
CDMA Working Paper Series
0601, Centre for Dynamic Macroeconomic Analysis.
[Downloadable!] Mark Weder, 2008.
"Sticky Prices and Indeterminacy ,"
Journal of Money, Credit and Banking ,
Blackwell Publishing, vol. 40(5), pages 1073-1082, 08.
[Downloadable!] (restricted)
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