Interest Rate Smoothing and "Calvo-Type" Interest Rate Rules: A Comment on Levine, McAdam, and Pearlman (2007)

Ida Wolden Bache, Øistein Røislanda and Kjersti Næss Torstensen
Additional contact information
Ida Wolden Bache: Norges Bank (Central Bank of Norway)
Øistein Røislanda: Norges Bank (Central Bank of Norway)
Kjersti Næss Torstensen: Norges Bank (Central Bank of Norway) and European University Institute
Authors registered in the RePEc Author Service: Peter McAdam ()

International Journal of Central Banking, 2011, vol. 7, issue 3, 79-90

Abstract: In a recent paper, Levine, McAdam, and Pearlman (2007) propose a new type of interest rate rule, which they denote a “Calvo-type” rule. The Calvo-type interest rate responds to the discounted sum of current and future rates of inflation. We show that a Calvo-type rule can be derived from a very different assumption than the one used by Levine, McAdam, and Pearlman (2007), namely a preference for interest rate smoothing. In addition to giving an alternative rationale for the Calvo-type rule, we provide additional empirical support for the specification.

JEL-codes: E37 E52 E58 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.ijcb.org/journal/ijcb11q3a3.pdf (application/pdf)
http://www.ijcb.org/journal/ijcb11q3a3.htm (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ijc:ijcjou:y:2011:q:3:a:3

Access Statistics for this article

International Journal of Central Banking is currently edited by Loretta J. Mester

More articles in International Journal of Central Banking from International Journal of Central Banking
Bibliographic data for series maintained by Bank for International Settlements ().