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Interest rate rules and macroeconomic stabilization

Author

Listed:
  • Mark Weder

Abstract

High degrees of relative risk aversion induce indeterminacy in cashin- advance economies. This paper finds that Taylor-style policies can preempt such sunspot equilibria. Specific policy recommendations depend on the fundamentals of the economy, i.e. the empirically true value of coefficient of relative risk aversion.

Suggested Citation

  • Mark Weder, 2006. "Interest rate rules and macroeconomic stabilization," Recherches économiques de Louvain, De Boeck Université, vol. 72(2), pages 195-204.
    • Handle: RePEc:cai:reldbu:rel_722_0195
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    Cited by:

    1. Mark Weder, 2008. "Money growth rules as stabilization policies in open economies," International Economic Journal, Taylor & Francis Journals, vol. 22(4), pages 525-537.

    More about this item

    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

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