Optimal simple rules and the lower bound on the nominal interest rate in the Christiano�Eichenbaum�Evans model of the US business cycle

Ascari, Guido; Branzoli, Nicola
August 2007
Portuguese Economic Journal;Aug2007, Vol. 6 Issue 2, p117
Academic Journal
Schmitt-Groh� and Uribe (NBER wp 10724, ) analyzes the optimal, simple and implementable monetary policy rules in a medium-scale macromodel, as the one proposed by Christiano et al. (J Polit Econ 113:1�45, ). In doing so, they use a sensible, but somewhat arbitrary constraint to account for the lower bound condition on the nominal interest rate. In this work, we check the robustness of their main results to such a criteria. We find that the optimal policies are actually absolutely robust to the easing of this criterion for all the different cases considered.


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