Schabert, Andreas; Hörmann, Markus - Rheinisch-Westfälisches Institut für … - 2009
Active interest rate policy is frequently recommended based on its merits in reducing macroeconomic volatility and … an interest rate peg, can be welfare enhancing:The minimum state variable solution and an autoregessive solution under a … peg can lead to lower welfare losses than the unique solution under an active interest rate rule. Given that a peg is …