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and the inflation rate without error, then it is typically optimal to respond infinitely strongly to observed deviations … from the central bank's targets. If it observes inflation and the output gap with error, the central bank will temper its … terms of estimated output and inflation then it is optimal to respond infinitely strongly to estimated deviations from the …
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inflation target and interest rate inertia. Optimal switching rules produce welfare gains relative to constant rules, with …
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both inflation and the output gap. When policy makers respond to the output gap as well as inflation, the standard … further reduced, even under pure inflation targeting …
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and the inflation rate without error, then it is typically optimal to respond infinitely strongly to observed deviations … from the central bank's targets. If it observes inflation and the output gap with error, the central bank will temper its … terms of estimated output and inflation then it is optimal to respond infinitely strongly to estimated deviations from the …
Persistent link: https://www.econbiz.de/10013052106
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