Dellas, H.; Diba, B.; Loisel, O. - Banque de France - 2010
a simple interest-rate rule targeting inflation; and it also allows large adjustments in the money supply, a property … increase banks' demand for liquidity, optimal monetary policy accepts an output contraction while it would not in the absence … of the frictions (or under suitably conducted fiscal policy). We find that optimal monetary policy can be approximated by …