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dc.contributor.authorAlexandre, Fernando-
dc.contributor.authorBação, Pedro-
dc.contributor.authorGabriel, Vasco-
dc.identifier.citationEstudos do GEMF. 2 (2008)en_US
dc.description.abstractWe analyse the effect of uncertainty concerning the state and the nature of asset price movements on the optimal monetary policy response. Uncertainty is modeled by adding Markov-switching shocks to a DSGE model with capital accumulation. In our analysis we consider both Taylor-type rules and optimal policy. Taylor rules have been shown to provide a good description of US monetary policy. Deviations from its implied interest rates have been associated with risks of financial disruptions. Whereas interest rates in Taylor-type rules respond to a small subset of information, optimal policy considers all state variables and shocks. Our results suggest that, when a bubble bursts, the Taylor rule fails to achieve a soft landing, contrary to the optimal policy.en_US
dc.publisherFEUC. Grupo de Estudos Monetários e Financeirosen_US
dc.subjectAsset Pricesen_US
dc.subjectMonetary Policyen_US
dc.subjectMarkov Switchingen_US
dc.titleTaylor-type rules versus optimal policy in a Markov-switching economyen_US
item.fulltextCom Texto completo-
item.grantfulltextopen- de Economia, Universidade de Coimbra- for Monetary and Financial Studies-
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