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Standard real business cycle models must rely on total factor productivity (TFP) shocks to explain the observed …
Persistent link: https://www.econbiz.de/10008636173
This paper examines the performance of forecast-based nonlinear Taylor rules in a class of simple microfunded models. The paper shows that even if the policy rule leads to a locally determinate (and stable) inflation target, there exist other learnable "global" equilibria such as cycles and...
Persistent link: https://www.econbiz.de/10005726618