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The long-run Taylor principle revisited

Fumio Hayashi

Economics Letters, 2017, vol. 161, issue C, 24-26

Abstract: There are two well-known conditions for the determinacy of equilibrium in MSRE (Markov-switching rational expectations) models. One is the long-run Taylor principle of Davig and Leeper (2007) and the other is by Farmer et al (2009). It is known that the former is merely a necessary condition. This note identifies a restriction on the solution under which the condition is sufficient as well as necessary.

Keywords: Determinacy of equilibrium; Markov-switching rational expectations models; Long-run Taylor principle (search for similar items in EconPapers)
JEL-codes: C62 E52 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.econlet.2017.09.010

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