The present paper evaluates Taylor-type monetary rules from the perspective of which rules delivers determinacy and learnability of a rational expectations equilibrium. The model is fully microfounded. The closed form solution is explicitly derived. The novelty of the approach taken here...

We examine the interplay between monetary and fiscal policies in a context where disturbances to the public deficit process are a primary source of macroeconomic instability. We perform simulations of optimal targeting rules on a sticky-price model "a' la" Woodford (1997). Our investigation...