rate setting. We make two new contributions. First, we develop a theoretical model capturing banks financing and the rate …This paper sheds light on how recent financial tensions in the euro area were ultimately reflected in bank interest …

policy to combat liquidity traps and deflation. Keywords: Imperfect knowledge, learning, interest-rate setting, fluctuations … interest-rate setting by monetary policy-makers faces two fundamental problems. First, some of the proposed interest rate rules … forms of optimal interest rate setting by the Central Bank can lead to expectational instability as economic agents …