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Discussion Paper Details

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Title: Estimated Interest Rate Rules: Do they Determine Determinacy Properties?

Author(s): Henrik Jensen

Publication Date: November 2009

Keyword(s): Equilibrium determinacy, Estimated Taylor rules, Interest rate rules, Monetary policy and Rules vs. discretion.

Programme Area(s): International Macroeconomics

Abstract: No. I demonstrate that econometric estimations of nominal interest rate rules may tell little, if anything, about an economy's determinacy properties. In particular, correct inference about the interest-rate response to inflation provides no information about determinacy. Instead, it could reveal whether optimal monetary policymaking is performed under discretion or commitment.

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Bibliographic Reference

Jensen, H. 2009. 'Estimated Interest Rate Rules: Do they Determine Determinacy Properties?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7555