Orphanides, Athanasios (contributor); … - 2006
four-quarter average of the inflation rate, pi∗ is the central bank’s
inflation objective, j is the forecast horizon of … considered here is a “difference” rule where the
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change in the nominal interest rate is determined by the inflation rate and ….
Specifically, let Yt denote the 1×3 vector consisting of the inflation rate, the unemploy-
ment rate, and the federal funds rate …