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Global and local determinacy in a one-step forward looking New Keynesian model

Alessandra Cornaro and Anna Agliari ()

Economic Modelling, 2011, vol. 28, issue 3, 1354-1362

Abstract: In this paper we consider a New Keynesian model for optimal monetary policy in a staggered fashion. We provide the relations of a non linear model of general economic equilibrium, implementing a suitable Taylor-type interest rate rule. We characterize the conditions that guarantee local determinacy and explore conditions under which local bifurcations of the target equilibrium may occur. Afterwards, we argue how local determinacy might be associated with global indeterminacy, providing some numerical examples.

Keywords: Nonlinear; model; Taylor; rule; Global; determinacy; Local; bifurcation (search for similar items in EconPapers)
Date: 2011
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