Leitemo, Kai; Røisland, Øistein; Torvik, Ragnar - In: Applied Financial Economics 15 (2005) 16, pp. 1165-1170
A discretionary monetary policy leads to suboptimal stabilization in models with the New Keynesian assumption of forward-looking price setting, and various policy rules that improve the discretionary equilibrium have been considered in the literature. The empirical evidence for forward-looking...