Sticky information and determinacy

The infinite-dimensional sticky-information Phillips curve is cast as a finite-dimensional timevarying system of difference equations in order to directly assess determinacy in the model with demand given by the forward-looking IS equation and monetary policy by an interest rate rule. An equivalence to the model without lagged expectations holds (albeit tenuously) for the particular specification and a common truncation method produces spurious determinacy.

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Year of publication:	2011
Authors:	Meyer-Gohde, Alexander
Publisher:	Berlin : Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
Subject:	Phillips-Kurve \| Unvollkommene Information \| Dynamisches Gleichgewicht \| Analysis \| Taylor-Regel \| Theorie \| determinacy \| Taylor rule \| sticky Information \| time-varying difference equations

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Series:	SFB 649 Discussion Paper ; 2011-006
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	65477546X [GVK] hdl:10419/56663 [Handle] RePEc:zbw:sfb649:sfb649dp2011-006 [RePEc]
Classification:	C62 - Existence and Stability Conditions of Equilibrium ; E31 - Price Level; Inflation; Deflation ; E43 - Determination of Interest Rates; Term Structure Interest Rates ; E52 - Monetary Policy (Targets, Instruments, and Effects)
Source:	EconStor

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