Rajan and Mishra lay down rules of the monetary game
Authors warn current models may display the policy biases of those who built them
Reserve Bank of India (RBI) governor Raghuram Rajan and co-author Prachi Mishra set out their ideas for tackling "destructive beggar-thy-neighbour strategies", in a working paper published today (March 29) by the RBI.
Rules of the monetary game offers a more formal treatment of an approach Rajan laid out in a speech earlier this month. The authors recommend monetary policies be grouped according to the severity of their spillovers, using a ‘traffic light' system of green, amber and red
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