Chang, Wen-ya; Tsai, Hsueh-fang; Chang, Juin-jen - In: International Review of Economics & Finance 20 (2011) 4, pp. 744-749
This paper analyzes the relationship between interest-rate feedback rules and macroeconomic stability in the presence of transaction costs. We show that with the Sims-type (1994) transaction-cost technology, a passive, rather than an active, interest-rate rule is more likely to generate a...