Forward-looking RE models such as the popular New Keynesian (NK) model do not provide a unique prediction about how the model economy behaves. We need some mechanism that ensures determinacy. McCallum (2012) says it is not needed because models are learnable only with the determinate solution...

From 2003, the Indian economy enjoyed a boom in growth coupled with moderate inflation for five years. The economy grew at a rate close to 9 percent per year, until it was punctured by the global financial crisis of 2008. Since then, the persistence of inflation in an environment of falling...

The existing empirical literature on Taylor-type interest rate rules has failed to achieve a robust consensus. Indeed, the relatively common finding that the Taylor principle does not hold has fueled a degree of controversy in the field. We attribute these mixed estimation results to a raft of...