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The Taylor principle fights back, Part II

Buffie, Edward F. - In: Journal of Economic Dynamics and Control 46 (2014) C, pp. 30-49

The existing literature holds that the Taylor principle often leads to indeterminacy in New Keynesian models that allow … clears quickly but not instantaneously, determinacy is the norm. The threat of indeterminacy is limited to a tiny, irrelevant …

Persistent link: https://www.econbiz.de/10010906783

Solving and estimating indeterminate DSGE models

Farmer, Roger E.A.; Khramov, Vadim; Nicolò, Giovanni - In: Journal of Economic Dynamics and Control 54 (2015) C, pp. 17-36

We propose a method for solving and estimating linear rational expectations models that exhibit indeterminacy and we …

Persistent link: https://www.econbiz.de/10011264278

Expectational stability of sunspot equilibria in non-convex economies

McGough, Bruce; Meng, Qinglai; Xue, Jianpo - In: Journal of Economic Dynamics and Control 37 (2013) 6, pp. 1126-1141

-sloping and steeper than the Frisch labor-supply curve – is necessary for joint indeterminacy and E-stability. Then, with a … space corresponding to stable indeterminacy, that is, learnable sunspot equilibria. These existence results overturn the …

Persistent link: https://www.econbiz.de/10010871022

Bounded interest rate feedback rules in continuous-time

d'Albis, Hippolyte; Augeraud-Véron, Emmanuelle; … - In: Journal of Economic Dynamics and Control 39 (2014) C, pp. 227-236

This paper analyzes the dynamic consequences of interest rate feedback rules in a flexible-price model where money enters the utility function. Two alternative rules are considered based on past or predicted inflation rates. The main feature is to consider inflation rates that are selected over...

Persistent link: https://www.econbiz.de/10010744195

Trend inflation, sticky prices, and expectational stability

Kurozumi, Takushi - In: Journal of Economic Dynamics and Control 42 (2014) C, pp. 175-187

indeterminacy of rational expectations equilibrium under the Taylor rule. This paper examines implications of trend inflation for … rational expectations equilibrium is likely to be expectationally stable even in cases of indeterminacy induced by high trend …

Persistent link: https://www.econbiz.de/10010776903

Learning about monetary policy rules when labor market search and matching frictions matter

Kurozumi, Takushi; Van Zandweghe, Willem - In: Journal of Economic Dynamics and Control 36 (2012) 4, pp. 523-535

solely at the extensive margin, forecast-based policy that meets the Taylor principle is likely to induce indeterminacy and E … intensive margins, the strictly inflation-forecast targeting policy remains likely to induce indeterminacy, but it generates a …

Persistent link: https://www.econbiz.de/10010574010

The Taylor principle fights back, Part I

Buffie, Edward F. - In: Journal of Economic Dynamics and Control 37 (2013) 12, pp. 2771-2795

interest rates increase aggregate demand, the Taylor principle leads to indeterminacy, and passive policy ensures a unique …

Persistent link: https://www.econbiz.de/10010719561

Variety matters

Pavlov, Oscar; Weder, Mark - In: Journal of Economic Dynamics and Control 36 (2012) 4, pp. 629-641

Countercyclical markups are a key transmission mechanism in many endogenous business cycle models. Yet, recent findings suggest that aggregate markups in the US are procyclical. The current model addresses this issue. It extends Galí's (1994) composition of aggregate demand model by endogenous...

Persistent link: https://www.econbiz.de/10011051990