Trend growth and learning about monetary policy rules

Mewael F. Tesfaselassie

No 1744, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: The paper examines the effect of trend productivity growth on the determinacy and learnability of equilibria under alternative monetary policy rules. It shows that under a policy rule that responds to current period inflation and the output gap a higher trend growth rate relaxes the conditions for determinacy and learnability. Results are mixed for other policy rules. Under the expectations-based rule, trend growth reduces the scope for determinacy but it relaxes the conditions for learnability. Under the lagged-data-based rule rule trend growth reduces the scope for determinacy and learnability.

Keywords: trend growth; learning; monetary policy; determinacy; expectational stability (search for similar items in EconPapers)
JEL-codes: E4 E5 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (3)

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Journal Article: Trend growth and learning about monetary policy rules (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1744

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