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Equilibrium Determinacy and Inflation Measures for Interest Rate Rules

Airaudo, Marco; Zanna, Luis-Felipe - In: Review of Economic Dynamics 15 (2012) 4, pp. 573-592

Empirical evidence suggests that goods are highly heterogeneous with respect to the degree of price rigidity. We develop a two-sector dynamic general equilibrium model to study the equilibrium determinacy properties of interest rate rules that respond to inflation measures differing in their...

Persistent link: https://www.econbiz.de/10010575221

Existence of a continuum of equilibria in a monetary random-matching model

Ishihara, Hideko - In: Review of Economic Dynamics 13 (2010) 4, pp. 886-898

In this paper, we study a monetary random-matching model where both goods and money are perfectly divisible, production is costly, and there is no exogenous upper bound on agents' money holdings, information on which is private to the agent. We show that there is a continuum of stationary...

Persistent link: https://www.econbiz.de/10008455311

Learning Stability in Economies with Heterogeneous Agents

Honkapohja, Seppo; Mitra, Kaushik - In: Review of Economic Dynamics 9 (2006) 2, pp. 284-309

An economy exhibits structural heterogeneity when the forecasts of different agents have different effects on the determination of aggregate variables. We study the important case of economies in which agents' behavior depends on forecasts of aggregate variables and show how different forms of...

Persistent link: https://www.econbiz.de/10005085587

Model Uncertainty and Endogenous Volatility

Branch, William; Evans, George W. - In: Review of Economic Dynamics 10 (2007) 2, pp. 207-237

This paper identifies two channels through which the economy can generate endogenous inflation and output volatility, an empirical regularity, by introducing model uncertainty into a Lucas-type monetary model. The equilibrium path of inflation depends on agents' expectations and a vector of...

Persistent link: https://www.econbiz.de/10005069600

Heterogeneous Learning

Giannitsarou, Chryssi - In: Review of Economic Dynamics 6 (2003) 4, pp. 885-906

There is by now a large literature characterising conditions under which learning schemes converge to rational expectations equilibria (REEs). It has been claimed that these results depend on the assumption of homogeneous agents and homogeneous learning. This paper analyses the stability of REEs...

Persistent link: https://www.econbiz.de/10005069633

Active and Passive Monetary Policy in an Overlapping Generations Model

Sorger, Gerhard - In: Review of Economic Dynamics 8 (2005) 3, pp. 731-748

indeterminacy and to countercyclical behavior of young-age consumption. The policy rule which minimizes inflation volatility can be … money growth targeting. Indeterminacy is more likely under an active forwardlooking rule than under the corresponding …

Persistent link: https://www.econbiz.de/10005090942

Tax Policy and Stability in a Model with Sector-Specific Externalities

Guo, Jang-Ting; Harrison, Sharon G. - In: Review of Economic Dynamics 4 (2001) 1, pp. 75-89

We show that in a two-sector real business cycle model wtih sufficiently strong investment externalities, a regressive … a flat or progressive tax scheme (such as that in the U.S.) is more susceptible to indeterminacy and sunspot … investment externalities and the slope parameter of the tax schedule, the economy exhibits various types of endogenous …

Persistent link: https://www.econbiz.de/10005091021

Robustness of Multiple Equilibria in OLG Economies

Cazzavillan, Guido; Pintus, Patrick A. - In: Review of Economic Dynamics 7 (2004) 2, pp. 456-475

This paper extends the standard Diamond's two-period OLG model of capital accumulation by introducing labor-leisure choice into the first-period of agents' life. Under the assumption of gross substitutability, we show that multiple intertemporal equilibria require both highly complementary...

Persistent link: https://www.econbiz.de/10005085588

Learning and Asymmetric Business Cycles

Chalkley, Martin; Lee, In Ho - In: Review of Economic Dynamics 1 (1998) 3, pp. 623-645

It is known that a variety of economic time series exhibit asymmetry in the sense that the arrival of a recession is prompt, while the recovery from a recession appears protracted. This paper provides an explanation for the asymmetric movement of economic time series over business cycles by...

Persistent link: https://www.econbiz.de/10005085547

Fragility of Competitive Equilibrium with Risk of Default

Bloise, Gaetano; Reichlin, Pietro; Tirelli, Mario - In: Review of Economic Dynamics 16 (2013) 2, pp. 271-295

We study competitive equilibrium in sequential economies under limited commitment. Default induces permanent exclusion from financial markets and endogenously determined solvency constraints prevent debt repudiation. Our analysis shows that such an enforcement mechanism is essentially fragile,...

Persistent link: https://www.econbiz.de/10010604556

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