Joe Pearlman
Thursday 17th May, room 745, 12:30pm

Abstract

This paper contributes to the McCallum-Cochrane debate on the determinacy of Taylor rules in two ways. Firstly, it shows that Cochrane’s critique of rules does not necessarily generalize to all simple rules. Secondly, it shows that when fully optimal or timeless rules are formulated in a transparent manner, then Cochrane’s critique always applies. The implication is that fully optimal or timeless rules will always be subject to local instability.


View this paper here