Bhansali, Vineer; Dorsten, Matthew P.; Wise, Mark B. - In: Journal of International Money and Finance 28 (2009) 8, pp. 1408-1425
We discuss the Taylor rule near low inflation and interest rates. Using an additional option-like term in the Federal … Reserve's loss function (i.e., the "deflation put") we extend the classic Taylor rule to one with an asymmetric response that … behavior can produce highly complex yield curve shapes. Using the usual Taylor rule and our proposed extension as building …