
Discouraging Deviant Behavior in Monetary Economics — by Lawrence Christiano, Yuta Takahashi
Discouraging Deviant Behavior in Monetary Economics — by Lawrence Christiano, Yuta Takahashi https://ift.tt/2NGs5Kw Discouraging Deviant Behavior in Monetary Economics NBER Working Paper No. 24949 Issued in August 2018 NBER Program(s):Economic Fluctuations and Growth We consider a model in which monetary policy is governed by a Taylor rule. The model has a unique equilibrium near the steady state, but also has other equilibria. The introduction of a particular escape clause into monetary policy works like the Taylor principle to exclude the other equilibria. We reconcile our finding about the escape clause with the sharply different conclusion reached in Cochrane (2011). Atkeson […]