Arbeitspapier
Trend Inflation, Taylor Principle and Indeterminacy
We show that low trend inflation strongly a¤ects the dynamics of a standard Neo-Keynesian model where monetary policy is described by a standard Taylor rule. Moreover, trend inflation enlarges the indeterminacy region in the parameter space, substantially altering the so-called Taylor principle. The main results hold for di¤erent types of Taylor rules, inertial policy rules and indexation schemes. The key message is that, whatever the set up, the literature on Taylor rules cannot disregard average inflation in both theoretical and empirical analysis.
- Sprache
-
Englisch
- Erschienen in
-
Series: Kiel Working Paper ; No. 1332
Monetary Policy
Price Level; Inflation; Deflation
Taylor Rules and Trend Inflation
Preisrigidität
Inflation
Taylor-Regel
New-Keynesian Phillips Curve
Theorie
Ropele, Tiziano
- Handle
- Letzte Aktualisierung
-
20.09.2024, 08:21 MESZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Ascari, Guido
- Ropele, Tiziano
- Kiel Institute for the World Economy (IfW)
Entstanden
- 2007