Title Taylor rule under financial instability / prepared by Sofía Bauducco, Aleš Bulíř, and Martin Čihák

Published Washington, D.C. : International Monetary Fund, IMF Institute, 2008

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Description 1 online resource (41 pages) : illustrations Series IMF working paper ; WP/08/18 IMF working paper ; WP/08/18. Summary This paper contributes to the analysis of monetary policy in the face of financial instability. In particular, we extend the standard new Keynesian dynamic stochastic general equilibrium (DSGE) model with sticky prices to include a financial system. Our simulations suggest that if financial instability affects output and inflation with a lag and if the central bank has privileged information about credit risk, monetary policy that responds instantly to increased credit risk can trade off more output and inflation instability today for a faster return to the trend than a policy that follows the simple Taylor rule with only the contemporaneous output gap and inflation Bibliography Includes bibliographical references (pages 23-25) Notes Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 MiAaHDL digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL Print version record Subject Banks and banking, Central -- Econometric models Monetary policy -- Econometric models Finance -- Econometric models Inflation (Finance) -- Econometric models Banks and banking, Central -- Econometric models Finance -- Econometric models Inflation (Finance) -- Econometric models Monetary policy -- Econometric models Form Electronic book Author Buliř, Aleš, author. Čihák, Martin, author. IMF Institute. International Monetary Fund. ISBN 1283515784 9781283515788

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