A monetary economy subject to expectational sunspots is prone to
instability, in the sense of multiple rational expectations equilibria. We
show how to modify the policy rule to guarantee stability in the presence
of expectational sunspots. The policy-maker must co-ordinate in ation
dynamics by targeting each of lagged, current and expected in ation.
We show that this solution maps directly into the timeless perspective
by Woodford. Finally, we trace the responses in an arti cial sunspot
economy to the adoption of our rule and illustrate the extent to which
macroeconomic persistence is reduced
