Optimal Interest-Rate Rules in a Forward-Looking Model, and Inflation Stabilization versus Price-Level Stabilization∗

Abstract

This paper characterizes the properties of various interest-rate rules in a basic forwardlooking model. We compare simple Taylor rules and rules that respond to price-level fluctuations (called Wicksellian rules). We argue that by introducing an appropriate amount of history dependence in policy, Wicksellian rules perform better than optimal Taylor rules in… (More)

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Cite this paper

@inproceedings{Giannoni2010OptimalIR, title={Optimal Interest-Rate Rules in a Forward-Looking Model, and Inflation Stabilization versus Price-Level Stabilization∗}, author={Marc P. Giannoni}, year={2010} }