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We study the properties of the optimal nominal interest rate policy under different levels of price indexation. In our model indexation regulates the sources of inflation persistence. When indexation is zero, the inflation gap is purely forward- looking and inflation persistence depends only on...
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, Wicksellian rules perform better than optimal Taylor rules in terms of welfare and robustness to alternative shock processes, and … completely robust to the specification of exogenous shock processes. -- optimal monetary policy ; Taylor rule ; robust policy …
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