We assess the conditions under which an interest rate rule granting an explicit response to stock prices can shield the economy against endogenous aggregate instability in the form of fluctuations driven by self-fulfilling beliefs, and fundamental equilibria that are not learnable in the...

This paper studies the equilibrium determinacy properties of a simple interest rate rule in a small open economy subject to endogenous dollarization (the use of a foreign currency in transactions) and international financial frictions (proxied by a feedback from external debt to sovereign risk...

We study optimal monetary policy in a New Keynesian-DSGE model where the combination of a credit channel and customer-market features in banking gives rise to counter-cyclical credit spreads. In our setting, monopolistically competitive banks set lending rates in a forward-looking fashion as...