Benhabib, Jess; Schmitt-Grohé, Stephanie; Uribe, Martín - 1998 - This draft: November 7, 1998
Since John Taylor's (1993) seminal paper, a large literature has argued that active interest rate feedback rules, that is, rules that respond to increases in inflation with a more than one-for-one increase in the nominal interest rate, are stabilizing. In this paper, we argue that once the zero...
