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The stability condition of a forward looking Taylor rule

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Abstract

Stability condition is an essential topic of monetary policy rules. If the policy rule can not satisfy the stability condition, it is difficult to treat the policy rule as the policy implementation guidelines. This paper purposes to derive the stability condition of a forward-looking Taylor rule with and without interest rate smoothing. This paper also conducts the empirical analysis of the stability condition of a forward-looking Taylor rule with data of China.

Suggested Citation

  • Danfeng Kong & Osamu Kamoike, "undated". "The stability condition of a forward looking Taylor rule," EAERG Discussion Paper Series 0705, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqeaer:07
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    File URL: http://www.uq.edu.au/economics/eaerg/dp/0705.pdf
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