We analyze a new class of equilibria that emerges when a central bank conducts monetary policy by setting an interest … equilibria involve a run on the central bank's interest target, whereby money grows fast, private agents borrow as much as … possible against the central bank, and the shadow interest rate is different from the policy target. We argue that these …

We analyze the optimal Taylor rule in a standard New Keynesian model. If the central bank can observe the output gap … from the central bank's targets. If it observes inflation and the output gap with error, the central bank will temper its … smoothing component. Under such a Taylor rule, if the central bank is behaving optimally, the estimates of inflation and the …

future central bank actions. Recently, a few central banks have started to explicitly signal their future policy intentions … macroeconomic effects of direct revelation of a central bank's expectations about the future path of the policy rate. We show that …, in an economy where private agents have imperfect information about the determination of monetary policy, central bank …