Kudoh, Noritaka; Nguyen, Hong Thang - In: Economics Bulletin 31 (2011) 3, pp. 2480-2490
We explore the long-run implications of adopting a Taylor-type interest-rate rule in a simple monetary growth model in which budget deficits are financed partly by unbacked government debt. Because monetary policy is accommodative only when it is passive, the Taylor principle, which requires...