Trade-off desemprego-inflação: Uma análise da aplicação de diferentes condições de transversalidade sobre uma versão adaptada do modelo de Taylor

Tácito Augusto Farias (), Fábio Rodrigues de Moura (), João Júnior (), Henrique Veras and André Melo ()
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Tácito Augusto Farias: Universidade Federal de Sergipe (UFS)
Fábio Rodrigues de Moura: Universidade Federal de Pernambuco (UFPE)
João Júnior: Universidade Federal de Pernambuco (UFPE)
André Melo: Universidade Federal de Pernambuco (UFPE)

Revista de Economia Mackenzie (REM), 2011, vol. 9, issue 2, 113-146

Abstract: The objective of this paper is to analyze the effects of different transversality conditions applied over an adapted version of Taylor’s (1989) inflation and unemployment model. The transversality conditions arise when we modify the approach of the basic model, more precisely when we set free the boundary conditions. In this sense, we propose four different approaches: horizontal terminal line (a free terminal time), vertical terminal line (a free terminal state), terminal time and terminal state both free, and infinite planning horizon. The results shows that, except in one case, the transversality conditions eventually change the original results, which suggests that, depending on how we set the problem, we can actually answer different questions regarding policy formulations.

Keywords: Transversality conditions; Inflation‑unemployment trade‑off; Taylor’s model. (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:aft:journl:v:9:2:2011:may:aug:p:113-146

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