Arbeitspapier

Monetary policy, determinacy, and the natural rate hypothesis

Imposing the natural rate hypothesis (NRH) can dramatically alter the determinacy bounds on monetary policy by closing the output gap in the long run. I show that the hypothesis eliminates any role for the output gap in determinacy and renders the conditions for determinacy identical for all conforming supply equations. Specializing further to IS demand, determinacy depends only on the parameters in the interest rate rule and a pure forward or backward-looking inflation target is inconsistent with determinacy. Monetary policy that embodies the Taylor principle with respect to contemporaneous inflation delivers a determinate equilibrium in all models that satisfy the NRH.

Sprache
Englisch

Erschienen in
Series: SFB 649 Discussion Paper ; No. 2011-049

Klassifikation
Wirtschaft
Existence and Stability Conditions of Equilibrium
Price Level; Inflation; Deflation
Interest Rates: Determination, Term Structure, and Effects
Monetary Policy
Thema
determinacy
natural rate hypothesis
Phillips curve
Taylor Principle
Geldpolitik
Taylor-Regel
Natürliche Arbeitslosigkeit
Phillips-Kurve
Neukeynesianische Makroökonomik
Theorie

Ereignis
Geistige Schöpfung
(wer)
Meyer-Gohde, Alexander
Ereignis
Veröffentlichung
(wer)
Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
(wo)
Berlin
(wann)
2011

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Meyer-Gohde, Alexander
  • Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk

Entstanden

  • 2011

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