EconPapers    
Economics at your fingertips  
 

Monetary Rules, Determinacy and Limited Enforcement

Jean Barthélemy () and Eric Mengus

Working papers from Banque de France

Abstract: This paper investigates the ability of monetary policy rules to coordinate private agents' expectations when the enforcement of rules is limited. We show that limited enforcement precludes diverging inflation paths ensuring that nominal variables remain bounded in equilibrium. When applied to Taylor rules this makes the Taylor principle necessary and sufficient for price determinacy. However, limited enforcement also allows agents to rationally anticipate multiple policies and we show that, in general, there is no policy rule able to recoordinate any private agents' belief on that rule. We finally provide conditions under which such recoordination may take place.

Keywords: Policy Rules; Determinacy; Limited Enforcement. (search for similar items in EconPapers)
JEL-codes: E31 E52 E65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://publications.banque-france.fr/sites/defaul ... documents/wp-700.pdf (application/pdf)

Related works:
Working Paper: Monetary Rules, Determinacy and Limited Enforcement (2019) Downloads
Working Paper: Credibility and Monetary Policy (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:700

Access Statistics for this paper

More papers in Working papers from Banque de France Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS. Contact information at EDIRC.
Bibliographic data for series maintained by Michael brassart ().

 
Page updated 2019-10-17
Handle: RePEc:bfr:banfra:700