Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/23162
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dc.contributor.authorBenhabib, Jessen_US
dc.contributor.authorSchmitt-Grohé, Stephanieen_US
dc.contributor.authorUribe, Martínen_US
dc.date.accessioned2009-01-29T15:49:04Z-
dc.date.available2009-01-29T15:49:04Z-
dc.date.issued2003en_US
dc.identifier.urihttp://hdl.handle.net/10419/23162-
dc.description.abstractThe existing literature on the stabilizing properties of interest-rate feedback rules has stressedthe perils of linking interest rates to forecasts of future inflation. Such rules have been foundto give rise to aggregate fluctuations due to self-fulfilling expectations. In response to thisconcern, a growing literature has focused on the stabilizing properties of interest-rate ruleswhereby the central bank responds to a measure of past inflation. The consensus view that hasemerged is that backward-looking rules contribute to protecting the economy from embarkingon expectations-driven fluctuations. A common characteristic of the existing studies that arriveat this conclusion is their focus on local analysis. The contribution of this paper is to conducta more global analysis. We find that backward-looking interest-rate feedback rules do not guaranteeuniqueness of equilibrium. We present examples in which for plausible parameterizationsattracting equilibrium cycles exist. The paper also contributes to the quest for policy rules thatguarantee macroeconomic stability globally. Our analysis indicates that policy rules wherebythe interest rate is set as a function of the past interest rate and current inflation are likely toensure global stability provided that the coefficient on lagged interest rates is greater than unity.en_US
dc.language.isoengen_US
dc.publisheren_US
dc.relation.ispartofseries|aWorking papers / Rutgers University, Department of Economics |x2003,04en_US
dc.subject.jelE63en_US
dc.subject.jelE31en_US
dc.subject.jelE52en_US
dc.subject.ddc330en_US
dc.subject.keywordBackward looking Taylor rulesen_US
dc.subject.keywordendogenous cyclesen_US
dc.subject.keywordsticky pricesen_US
dc.subject.stwZinspolitiken_US
dc.subject.stwRegelgebundene Politiken_US
dc.subject.stwTaylor-Regelen_US
dc.subject.stwInflationen_US
dc.subject.stwKonjunkturen_US
dc.subject.stwInflationsbekämpfungen_US
dc.subject.stwDynamisches Gleichgewichten_US
dc.subject.stwTheorieen_US
dc.subject.stwHopf bifurcationen_US
dc.titleBackward-Looking Interest-Rate Rules, Interest-Rate Smoothing,and Macroeconomic Instabilityen_US
dc.typeWorking Paperen_US
dc.identifier.ppn362926220en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-

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