Article ID Journal Published Year Pages File Type
5062332 Economics Letters 2007 7 Pages PDF
Abstract

This paper provides a useful method to solve optimal simple rules under risk sensitive preference in macromodels with forward looking behavior. An application to a new Keynesian model with lagged dynamics is offered and risk sensitive preference is found to amplify the policy responses.

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Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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Optimal simple rules in RE models with risk sensitive preferences
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