Ravenna, Federico; Walsh, Carl E. - Federal Reserve Bank of San Francisco - 2009
, University of California, Santa Cruz, CA 95064, and Federal Reserve Bank
of San Francisco, 101 Market St, San Francisco, CA 94105 … deviating from price stability are small regardless of the steady state efficiency, and
the central bank can replicate the loss …
),
where R
t
is the gross return on an asset paying one unit of consumption aggregate in any
state of the world and λ
t
is the …