%0 Report
%A Alonso González, Luis Alberto
%A Palacio Vera, Alfonso
%T Monetary policy, Taylor's rule and endogenous fluctuations
%J Documentos de Trabajo de la Facultad de Ciencias Económicas y Empresariales
%D 1999
%@ 2255-5471
%U https://hdl.handle.net/20.500.14352/64365
%X The paper analyses the dynamic behaviour of an economy when the central bank (CB) implements an inflation targeting regime. For this purpose, a simple macroeconomic model is constructed and subjected to formal dynamic analysis. A first result is that, under certain conditions, the emergence of endogenous oscillations in the economy is a possible scenario. A second implication is that CBs face two main policy dilemmas: (i) the degree of gradualism adopted when setting the level of short-term interest rates and (ii) the desirability or otherwise of raising interest rates as soon as economic indicators suggest the emergence of inflationary pressures.
%~