Determinacy, stock market dynamics and monetary policy inertia

D. Pfajfar, E. Santoro

Research output: Contribution to journalArticleScientificpeer-review

6 Citations (Scopus)

Abstract

We study equilibrium determinacy in a New-Keynesian model where the Central Bank responds to asset prices growth. Unlike Taylor-type rules that react to asset prices, the proposed alternative does not harm dynamic stability and in certain cases promotes determinacy by inducing interest-rate inertia.
Original languageEnglish
Pages (from-to)7-10
JournalEconomics Letters
Volume112
Issue number1
DOIs
Publication statusPublished - 2011

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