Explicit instrument versus targeting rules in the backward-looking model
In the backward-looking model, an explicit instrument rule is almost as efficient as a target rule. An explicit instrument rule leads to a more stable real rate of interest and hence an output stabilization bias compared to the target rule.
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References listed on IDEAS
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- Richard T. Froyen & Alfred V. Guender, 2007. "Optimal Monetary Policy under Uncertainty," Books, Edward Elgar, number 12510.
- Lars E.O. Svensson, 2002.
"What Is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules,"
118, Princeton University, Department of Economics, Center for Economic Policy Studies..
- Lars E. O. Svensson, 2003. "What Is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules," Journal of Economic Literature, American Economic Association, vol. 41(2), pages 426-477, June.
- Lars E. O. Svensson, 2003. "What is Wrong with Taylor Rules? Using Judgment in Monetary Policy through Targeting Rules," NBER Working Papers 9421, National Bureau of Economic Research, Inc.
- Bennett T. McCallum & Edward Nelson, 2005.
"Targeting versus instrument rules for monetary policy,"
Board of Governors of the Federal Reserve System (U.S.), pages 225-245.
- Bennett T. McCallum & Edward Nelson, 2005. "Targeting versus instrument rules for monetary policy," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 597-612.
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