Hopf Bifurcation from New-Keynesian Taylor Rule to Ramsey Optimal Policy

Jean-Bernard Chatelain and Kirsten Ralf

Working Papers from HAL

Abstract: This paper compares different implementations of monetary policy in a new- Keynesian setting. We can show that a shift from Ramsey optimal policy under short term commitment (based on a negative-feed back mechanism) to a Taylor rule (based on a positive-feed back mechanism) corresponds to a Hopfbifurcation with opposite policy advice and a change of the dynamic properties. This bifurcation occurs because of the ad hoc assumption that interest rate is a forward-looking variable when policy targets (inflation and out put gap) a reforward-looking variables in the new-Keynesian theory.

Keywords: Bifurcations; Taylor rule; Taylor principle; new-Keynesian model; Ramsey optimal policy (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01549929v3
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: HOPF BIFURCATION FROM NEW-KEYNESIAN TAYLOR RULE TO RAMSEY OPTIMAL POLICY (2021)
Working Paper: Hopf Bifurcation from new-Keynesian Taylor rule to Ramsey Optimal Policy (2021)
Working Paper: Hopf Bifurcation from new-Keynesian Taylor rule to Ramsey Optimal Policy (2021)
Working Paper: Hopf Bifurcation from new-Keynesian Taylor rule to Ramsey Optimal Policy (2020)
Working Paper: Hopf Bifurcation from New-Keynesian Taylor Rule to Ramsey Optimal Policy (2020)
Working Paper: Hopf Bifurcation from new-Keynesian Taylor rule to Ramsey Optimal Policy (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-01549929

DOI: 10.2139/ssrn.2971227

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