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dc.contributor.authorChadha, Jagjit S.
dc.contributor.authorCorrado, Luisa
dc.date.accessioned2007-08-23T10:31:30Z
dc.date.available2007-08-23T10:31:30Z
dc.date.issued2007-05
dc.identifier.otherCWPE0722
dc.identifier.urihttp://www.dspace.cam.ac.uk/handle/1810/194702
dc.identifier.urihttps://www.repository.cam.ac.uk/handle/1810/194702
dc.description.abstractForward looking agents with expectational errors provide a problem for monetary policy. We show that under such conditions a standard interest rate rule may not achieve determinacy. We suggest a modification to the standard policy rule that guarantees determinacy in this setting, which involves the policy maker coordinating inflation dynamics by responding to each of past, current and expected inflation. We show that this solution maps directly into Woodford’s (2000) timeless perspective. We trace the responses in an artificial economy and illustrate the extent to which macroeconomic persistence is reduced following the adoption of this rule.en
dc.language.isoenen
dc.publisherFaculty of Economics
dc.relation.ispartofseriesCambridge Working Papers in Economics
dc.rightsAll Rights Reserveden
dc.rights.urihttps://www.rioxx.net/licenses/all-rights-reserved/en
dc.subjectExpectational Errorsen
dc.subjectIndeterminacyen
dc.subjectMonetary Policy Rulesen
dc.titleOn the Determinacy of Monetary Policy under Exceptional Errorsen
dc.typeWorking Paperen
dc.identifier.doi10.17863/CAM.5375


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