Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209837
Authors: 
Sveen, Tommy
Weinke, Lutz
Year of Publication: 
2004
Series/Report no.: 
Working Paper No. 2004/12
Abstract: 
According to the Taylor principle a central bank should adjust the nominal interest rate by more than one for one in response to changes in current inflation. Most of the existing literature supports the view that by following this simple recommendation a central bank can avoid being a source of unnecessary fluctuations in economic activity. The present paper shows that this conclusion is not robust with respect to the modelling of capital accumulation. We use our insights to discuss the desirability of alternative arrangements for the conduct of monetary policy.
Subjects: 
sticky prices
investment
monetary policy
JEL: 
E22
E31
Persistent Identifier of the first edition: 
ISBN: 
82-7553-257-4
Additional Information: 
Forthcoming in Journal of Economic Theory
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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