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Taylor Rules in a Limited Participation Model / Lawrence J. Christiano, Christopher J. Gust.
- Format:
- Book
- Author/Creator:
- Christiano, Lawrence J.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w7017.
- NBER working paper series no. w7017
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1999.
- Summary:
- We use the limited participation model of money as a laboratory for studying the operating characteristics of Taylor rules for setting the rate of interest. Rules are evaluated according to their ability to protect the economy from bad outcomes such as the burst of inflation observed in the 1970s. Based on our analysis, we argue for a rule which: (i) raises the nominal interest rate more than one-for-one with a rise in inflation; and (ii) does not change the interest rate in response to a change in output relative to trend.
- Notes:
- Print version record
- March 1999.
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