Monetary Policy Regime Switches And Macroeconomic Dynamics

@inproceedings{Foerster2016MonetaryPR,
  title={Monetary Policy Regime Switches And Macroeconomic Dynamics},
  author={Andrew T. Foerster},
  year={2016}
}
This article considers the determinacy and distributional consequences of regime switching in monetary policy. Although switching in the inflation target does not affect determinacy, switches in the inflation response can cause indeterminacy. Satisfying the Taylor principle period by period is neither necessary nor sufficient for determinacy when inflation responses switch; indeterminacy can arise if monetary policy responds too aggressively to inflation in the active regime. Inflation target… CONTINUE READING

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