The Taylor Principle and Global Determinacy in a Non-Ricardian World

Jean-Pascal Benassy and Michel Guillard ()

No 05-26, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: The Taylor principle is quite usually considered as a central condition for price determinacy. Recently, however, this has been questioned on several grounds, notably because (i ) this condition is a condition for local determinacy, not global determinacy (ii ) it has been derived in “Ricardian” economies, and it appears that going to a non- Ricardian framework makes a very big difference for the determinacy conditions. In this paper we scrutinize the two issues together, and we find that for non-Ricardian equilibria the Taylor principle is replaced by another “financial dominance” criterion.

Keywords: Taylor Principle; Taylor Rules; Global Determinacy; Price Determinacy; Non-Ricardian Economies; Non-Ricardian equilibria (search for similar items in EconPapers)
JEL-codes: E52 E63 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2005
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Related works:
Working Paper: The Taylor principle and global determinacy in a non Ricardian world (2005)
Working Paper: The Taylor principle and global determinacy in a non Ricardian world (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:eve:wpaper:05-26

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