Interest rate rules and macroeconomic stabilization

Mark Weder

Recherches économiques de Louvain, 2006, vol. 72, issue 2, 195-204

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.

Date: 2006
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Related works:
Working Paper: Interest Rate Rules and Macroeconomic Stabilization (2006)
Working Paper: Interest rate rules and macroeconomic stabilization (2006)
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