Reflections on the failure of the Taylor principle under commitment

We offer an explanation of why optimal policy under commitment requires weaker reaction to supply shock, reflected in the failure of the Taylor principle. This lesson seems to be prevalent among central banks and yet has been analyzed incomprehensively in the economic literature.

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Year of publication:	2011
Authors:	Barnea, Emanuel ; Liviatan, Nissan
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 112.2011, 1, p. 71-74
Publisher:	Elsevier
Subject:	Taylor principle Discretion Commitment

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009146103