Technological change and monetary policy in a sticky-price model

Eiji Tsuzuki and Tomohiro Inoue

Research in Economics, 2011, vol. 65, issue 3, 180-194

Abstract: We developed a sticky-price model that introduces the factors of (a) the non-separability of consumption and labor in the utility function and (b) a technological change induced by the investment of profits, to analyze the determinacy of equilibrium. We found that while engaging in inflation targeting increases the probability of determinacy, engaging in share-price targeting decreases the probability of determinacy in a standard sticky-price model; engaging in both inflation targeting and share-price targeting can increase the probability of determinacy in our model.

Keywords: Taylor; principle; Indeterminacy; Share-price; targeting; New; Keynesian; Phillips; curve (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:65:y:2011:i:3:p:180-194

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