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perfect credibility and rational expectations. However, a speed limit policy is more robust than a price level target. Even … for small deviations from either rational expectations or perfect credibility, a speed limit policy dominates a price …
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flexibility and credibility; similarly, New Zealand's improved inflation performance was achieved without a discernable increase …
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In a standard New Keynesian model, a myopic central bank concerned with stabilizing inflation and changes in the output gap will implement a policy under discretion that replicates the optimal, timeless perspective, precommitment policy. By stabilizing output gap changes, the central bank...
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