What are the economic effects of an interest rate cut when an economy is in the midst of a financial crisis? Under what … ffects? We answer these questions in a general class of open economy models, where a financial crisis is modeled as a time … the traded good sector and in adjusting the rate at which that output can be used in other parts of the economy, then a …

, however, is that there seem to be certain "threshold" levels of financial and institutional development that an economy needs …

that an interest rate rule that is too narrowly focused on inflation destabilizes asset markets and the broader economy …