Taylor rules and equilibrium determinacy in a two-country model with non-traded goods

Seiya Fujisaki

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze a relation between interest rate controls and equilibrium determinacy using a two-country model featuring traded and non-traded goods. In addition, parameters of preference and production may differ between the two countries. We find that macroeconomic stability strongly depends on such heterogeneity including monetary policy, and that it is easier to generate determinate equilibrium under liberalization of the economy.

Keywords: heterogeneity; Taylor rule; open economy; non-traded goods; equilibrium determinacy (search for similar items in EconPapers)
JEL-codes: E52 F41 (search for similar items in EconPapers)
Date: 2012-07-12
New Economics Papers: this item is included in nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:40023

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