Price level determinacy and the choice of policy targets under rational expectations |
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| Authors: | Aliza Brezis Edward K Offenbacher |
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| Institution: | Bank of Israel, Jerusalem, Israel;Bank of Israel, Jerusalem, Israel;Federal Reserve Board, Washington, DC, USA |
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| Abstract: | We show that in a conventional macro model with rational expectations, the government can use monetary policy to peg real interest rates, and still attain a determinate price level provided it also pegs some nominal policy variable, e.g., nominal expenditures. |
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