Determinacy, learnability, and monetary policy inertia

James Bullard and Kaushik Mitra

No 2000-030, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We document that monetary policy inertia can help alleviate problems of indeterminacy and non-existence of stationary equilibrium observed for some commonly-studied monetary policy rules. We also find that inertia promotes learnability of equilibrium. The context is a simple, forward-looking model of the macroeconomy widely used in the rapidly expanding literature in this area. We conclude that this might be an important reason why central banks in the industrialized economies display considerable inertia when adjusting monetary policy in response to changing economic conditions.

Keywords: Monetary policy; Monetary theory (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (30)

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Related works:
Journal Article: Determinacy, Learnability, and Monetary Policy Inertia (2007)
Journal Article: Determinacy, Learnability, and Monetary Policy Inertia (2007)
Working Paper: Determinacy, Learnability, and Monetary Policy Inertia (2004)
Working Paper: Determinacy, Learnability, and Monetary Policy Inertia
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DOI: 10.20955/wp.2000.030

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