Benhabib, Jess; Schmitt-Grohe, Stephanie; Uribe, Martin - Society for Computational Economics - SCE - 2001
When the Central Bank sets nominal rates as a a non-decreasing function of the inflation rate to stabilize the economy … inflation is too low, in certain cases the uniqueness of the desirable equilibrium can be restored. This suggests the use of non … nominal interest rates and the inflation rate may well emerge as a result of Taylor rules despite non-Ricardian policies …