Euler equations and monetary policy

Fabrice Collard and Harris Dellas ()

Economics Letters, 2012, vol. 114, issue 1, 1-5

Abstract: Euler equations are the key link between monetary policy and the real economy in NK models. Under separable preferences, they fail to match interest rates. Non-separability between leisure and consumption significantly improves their fit and reliability for studying monetary policy.

Keywords: Euler interest rate; Non-separable utility; Monetary policy (search for similar items in EconPapers)
JEL-codes: E10 E43 E44 E52 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:114:y:2012:i:1:p:1-5

DOI: 10.1016/j.econlet.2011.09.009

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