We show that a vanishingly small friction in intertemporal co-ordination results in a unique bounded equilibrium in the New Keynesian model. This is the equilibrium customarily used to guide monetary policy, also known as the minimum-state-variable solution. But it does not rely on the Taylor Principle or any other off-equilibrium policy threat, and is therefore also immune to the Fiscal Theory of the Price Level. This liberates policy analysis from a thorny equilibrium selection issue.

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