Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/22263 
Authors: 
Year of Publication: 
2003
Series/Report no.: 
SFB 373 Discussion Paper No. 2003,49
Publisher: 
Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes, Berlin
Abstract: 
This paper derives new results on the effects of employing Taylor rules in economies that are subject to real market imperfections such as production externalities. Taylor rules that aggressively respond to output can eliminate sunspot equilibria that arise from the increasing returns. The paper also finds that rules which should be chosen (avoided) in perfect market environments often yield (ensure) multiple (unique) rational expectations solutions in alternative settings. Therefore, exact knowledge on the degree of market imperfection may be pivotal for robust policy advice.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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