Arbeitspapier
Indeterminacy with inflation-forecast-based rules in a two-bloc model
We examine the performance of forward-looking inflation-forecast-based rules in open economies. In a New Keynesian two-bloc model, a methodology first employed by Batini and Pearlman (2002) is used to obtain analytically the feedback parameters/horizon pairs associated with unique and stable equilibria. Three key findings emerge: first, indeterminacy occurs for any value of the feedback parameter on inflation if the forecast horizon lies too far into the future. Second, the problem of indeterminacy is intrinsically more serious in the open economy. Third, the problem is compounded further in the open economy when central banks respond to expected consumer, rather than pro- ducer price inflation.
- Sprache
-
Englisch
- Erschienen in
-
Series: ECB Working Paper ; No. 340
- Klassifikation
-
Wirtschaft
Monetary Policy
Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications
Central Banks and Their Policies
- Thema
-
in°ation-forecast-based rules
indeterminacy
open economy
Taylor rules
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Batini, Nicoletta
Levine, Paul
Pearlman, Joseph G.
- Ereignis
-
Veröffentlichung
- (wer)
-
European Central Bank (ECB)
- (wo)
-
Frankfurt a. M.
- (wann)
-
2004
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Batini, Nicoletta
- Levine, Paul
- Pearlman, Joseph G.
- European Central Bank (ECB)
Entstanden
- 2004
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