Economics, Econometrics and Finance
4 years ago

Prefer Stable Interest Rates? It Could Backfire, Study Finds

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RePEc: Research Papers in Economics
When preferences for a stable interest rate become self-defeating
Ragna Alstadheim, Øistein Røisland

Paper Summary

Preferences for a stable interest rate by monetary policy makers can backfire, leading to unstable rates. Focusing on stabilizing the real interest rate instead of the nominal rate is more effective in achieving stability.

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