Monetary policy and multiple equilibria
Jess Benhabib, Stephanie Schmitt-Grohé, Martín Uribe, Centre for Economic Policy Research (Great Britain)
Centre for Economic Policy Research, 1998 - Equilibrium (Economics) - 32 pages
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active monetary policy aggregate demand analysis assumed Calvo consumption and money consumption and real contemporaneous feedback rules continuous-time converge asymptotically cycle denotes determinacy of equilibrium discrete-time models eigenvalues equation equilibrium conditions equilibrium converging equilibrium exists equilibrium is indeterminate equilibrium is locally firms flexible-price model given Hopf bifurcation household implies inflation rate interest rate feedback interest-rate feedback rules Jacobian Jacobian matrix linear locally indeterminate macroeconomic marginal utility mnp3 money enters negative real nominal interest rate non-Ricardian fiscal policy partial derivative passive monetary policy perfect-foresight equilibrium policy is active policy is non-Ricardian policy is passive policy is Ricardian positive real preferences and technology price level price-change signal production function Proposition purely contemporaneous feedback rate feedback rule rate of inflation real allocation converges real balances receives a price-change result Ricardian fiscal policy separable in consumption steady sticky-price model symmetric equilibrium trace transmission mechanism transversality condition utility function variables Woodford