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Explicit instrument versus targeting rules in the backward-looking model


  • Froyen, Richard T.
  • Guender, Alfred V.


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.

Suggested Citation

  • Froyen, Richard T. & Guender, Alfred V., 2010. "Explicit instrument versus targeting rules in the backward-looking model," Economics Letters, Elsevier, vol. 106(1), pages 64-66, January.
  • Handle: RePEc:eee:ecolet:v:106:y:2010:i:1:p:64-66

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    References listed on IDEAS

    1. 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.
    2. 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.
    3. Richard T. Froyen & Alfred V. Guender, 2007. "Optimal Monetary Policy under Uncertainty," Books, Edward Elgar Publishing, number 12510.
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