Determinacy, stock market dynamics and monetary policy inertia

Research output: Contribution to journalJournal articleResearchpeer-review

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
JournalEconomics Letters
Volume112
Issue number1
Pages (from-to)7-10
Number of pages4
ISSN0165-1765
DOIs
Publication statusPublished - 2011

ID: 33780789