Andersen, Torben M. (contributor); … - 2008
nominal interest rate Rt
earned on risk-free nominal bonds throughout this monetary union between
periods t and t + 1. The …�s policy instrument is the interest rate, while it passively
supplies the money demanded by households. Thus, as long as money … condition. De�ning the net risk-free nominal interest rate Rt by the
relation (1 + Rt) 1 = E [Qt;t+1], the �rst-order conditions …