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This paper explores the extent to which Knightian uncertainty can explain features of interest rate paths observed in practice that are not generally replicated by models of optimal monetary policy. Interest rates tend to move in a sequence of steps in a given direction, or remain constant for...
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activity. This paper estimates a small structural vector autoregression (SVAR) model for Australia to examine the intertwined …, and past shocks to credit are found to be important for credit growth. Over longer horizons, shocks to output, inflation … slow, similar to that of inflation and slower than that of output. The model suggests that an unexpected 25 basis point …
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