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Determinacy, stock market dynamics and monetary policy inertia

Damjan Pfajfar () and Emiliano Santoro ()

Economics Letters, 2011, vol. 112, issue 1, 7-10

Abstract: We study equilibrium determinacy in a New-Keynesian model where the Central Bank responds to asset prices growth. Unlike Taylor-type rules that react to asset prices, the proposed alternative does not harm dynamic stability and in certain cases promotes determinacy by inducing interest-rate inertia.

Keywords: Asset; prices; Determinacy; Monetary; policy; inertia (search for similar items in EconPapers)
Date: 2011
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Working Paper: Determinacy, Stock Market Dynamics and Monetary Policy Inertia (2008) Downloads
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