Benhabib, Jess; Schmitt-Grohe, Stephanie; Uribe, Martin - In: Proceedings (2003), pp. 1379-1423
The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to give rise to aggregate fluctuations due to self-fulfilling expectations. In response to this...