The natural rate hypothesis and real determinacy

Arbeitspapier

The uniqueness of bounded local equilibria under interest rate rules is analyzed in a model with sticky information à la Mankiw and Reis (2002). The main results are tighter bounds on monetary policy than in sticky-price models, irrelevance of the degree of output-gap targeting for determinacy, independence of determinacy regions from parameters outside the interest-rate rule, and equivalence between real determinacy in models satisfying the natural rate hypothesis and nominal determinacy in the associated full-information, flex-price equivalent. The analysis follows from boundedness considerations on the nonautonomous recursion that describe the MA(∞) representation of variables' reaction to endogenous fluctuations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 649 Discussion Paper ; No. 2008,054

Classification and Topics

• Classification: Wirtschaft ; Existence and Stability Conditions of Equilibrium ; Price Level; Inflation; Deflation ; Monetary Policy ; Central Banks and Their Policies ; Policy Objectives; Policy Designs and Consistency; Policy Coordination
• Subject: Nonautonomous difference equations ; indeterminacy ; Taylor rule ; sticky information ; sticky prices ; Geldpolitik ; Taylor-Regel ; Entscheidung bei Unsicherheit ; Natürliche Arbeitslosigkeit ; Ungleichgewichtstheorie ; Information ; Preisrigidität ; Analysis ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Meyer-Gohde, Alexander
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
• (where): Berlin
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/25297
• Last update: 10.03.2025, 11:45 AM CET