Evans, George W.; Honkapohja, Seppo - C.E.P.R. Discussion Papers - 2003
respect to determinacy, stability under learning and optimality. First we review the recent literature: open-loop interest … determinacy and stability under learning, and implements optimal policy. We show that Friedman’s rule also can generate equilibria … that are determinate and stable under learning. Computing the mean quadratic welfare loss, however, we find for calibrated …