Optimal Monetary Policy Regime Switches∗
نویسندگان
چکیده
Given structural shifts in the economy, optimal simple monetary policy rules may respond with switches in their policy parameters. When the growth rate, inter-temporal preferences, or volatilities switch, the monetary authority chooses regime-dependent policy parameters to maximize welfare. These optimized policy parameters may differ across regimes and from the optimal choice of parameters for economies with fixed regimes. Rules that are more flexible by allowing more parameters to synchonously switch produce welfare gains, with switches in the degree of interest rate inertia producing the largest gains.
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