RT Generic
T1 Performance of interest rate rules under credit market imperfections
A1 Blas Pérez, Beatriz de
AB The stabilization effects of Taylor rules are analyzed in a limited participation framework with and without credit market imperfections in capital goods production. Financial frictions substantially amplify the impact of shocks, and also reinforce the stabilizing or destabilizing effects of interest rate rules. However, these effects are reversed relative to New Keynesian models: under limited participation, interest rate rules are stabilizing for technology shocks, but imply an output-inflation tradeoff for demand shocks. Moreover, because financial frictions imply excessive fluctuation, stabilization via an interest rate rule can be a welfare-improving response to technology shocks.
SN 2340-5031
YR 2003
FD 2003-07
LK https://hdl.handle.net/10016/295
UL https://hdl.handle.net/10016/295
LA eng
LA eng
DS e-Archivo
RD 7 may. 2024