Determinacy, stock market dynamics and monetary policy inertia
Damjan Pfajfar () and
Emiliano Santoro ()
Economics Letters, 2011, vol. 112, issue 1, 7-10
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)
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Working Paper: Determinacy, Stock Market Dynamics and Monetary Policy Inertia (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:112:y:2011:i:1:p:7-10
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