Jääskelä, Jarkko P.; Kulish, Mariano - In: Journal of Economic Dynamics and Control 34 (2010) 7, pp. 1295-1304
The rational expectations equilibrium of a small open economy can be subject to indeterminacy if foreign monetary policy does not satisfy the Taylor principle. We study the implications of foreign induced indeterminacy in the two-country version of the sticky-price small open economy model. Our...