Discretionary Policy and Multiple Equilibria in LQ RE Models

We study discretionary equilibria in dynamic linear-quadratic rational expectations models. In contrast to the assumptions that pervade this literature we show that these models do have multiple equilibria in some situations. We demonstrate the existence of multiple discretionary equilibria by example. We investigate general properties of discretionary equilibria and discuss implications for numerical algorithms.

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Year of publication:	2006-11-09
Authors:	Blake, Andrew P. ; Kirsanova, Tatiana
Institutions:	Volkswirtschaftliche Fakultät, Ludwig-Maximilians-Universität München
Subject:	Time Consistency \| Discretion \| Multiple Equilibria \| LQ RE models

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Extent:	application/pdf
Series:	MPRA Paper.
Type of publication:	Book / Working Paper
Classification:	E31 - Price Level; Inflation; Deflation ; E58 - Central Banks and Their Policies ; E52 - Monetary Policy (Targets, Instruments, and Effects) ; C61 - Optimization Techniques; Programming Models; Dynamic Analysis ; E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008543792