Interest Rate Rules and Macroeconomic Stabilization

Mark Weder

No 2006-01, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: High degrees of relative risk aversion induce indeterminacy in cash-in-advance economies. This paper finds that Taylor-style policies can pre-empt such sunspot equilibria. Specific policy recommendations depend on the fundamentals of the economy, i.e. the empirically true value of coecient of relative risk aversion.

Keywords: cash-in-advance economies; Taylor rules; sunspot equilibria (search for similar items in EconPapers)
JEL-codes: E32 E52 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2006
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Interest rate rules and macroeconomic stabilization (2006)
Working Paper: Interest rate rules and macroeconomic stabilization (2006)
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