Interest-rate smoothing in a two-sector small open economy
In this paper, interest-rate smoothing under Taylor-type rules is considered for an empirically plausible two-sector small open economy. A simple Taylor-type rule that has sufficient response to output gap, coupled with interest-rate smoothing, can improve welfare relative to our benchmark historical rule. This result is robust to alternative values of the degree of habit persistence and nontraded-goods price stickiness in the model. Alternatively, the interest-rate smoothing result may not...[Show more]
|Collections||ANU Research Publications|
|Source:||Journal of Macroeconomics|
|01_Kam_Interest-rate_smoothing_in_a_2007.pdf||473.69 kB||Adobe PDF||Request a copy|
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