Suppose the monetary-policy rule has the wrong natural rate of interest. That is, the central bank follows

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Suppose the monetary-policy rule has the wrong natural rate of interest. That is, the central bank follows this rule:
it = πt + p’ + θπ(πt − πt*) + θY(Yt − t)

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Macroeconomics

ISBN: 978-1464168505

5th Canadian Edition

Authors: N. Gregory Mankiw, William M. Scarth

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Question Posted: Dec 31, 2015 01:39 AM

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Suppose the monetary-policy rule has the wrong natural rate of interest. That is, the central bank follows

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If the central bank has the wrong natural rate of interest then it is using a value that is different from the real value Suppose that the wrong natural rate of interest is defined as follows In this ...View the full answer

Macroeconomics

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