Determinacy, stock market dynamics and monetary policy inertia

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.

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Year of publication:	2011
Authors:	Pfajfar, Damjan ; Santoro, Emiliano
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 112.2011, 1, p. 7-10
Publisher:	Elsevier
Keywords:	Asset prices Determinacy Monetary policy inertia

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009146163