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Economics Working Papers, Department of Economics, CAU Kiel >
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http://hdl.handle.net/10419/22058
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| Title: | | A Proof of Determinacy in the New-Keynesian Sticky Wages and Prices Model  |
| Authors: | | Franke, Reiner Flaschel, Peter |
| Issue Date: | | 2008 |
| Series/Report no.: | | Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2008,14 |
| Abstract: | | The paper is concerned with determinacy in a version of the New-Keynesian model that integrates imperfect competition and nominal price and wage setting on goods and labour markets. The model is reformulated with an explicit period of arbitrary length and shown to remain well-defined as the period shrinks to zero. The 4×4 constituent matrix of the model?s continuous-time counterpart is mathematically tractable and its determinacy results carry over to the period model at least if the period is sufficiently short. This being understood, it is proved that determinacy is (essentially) ensured if an extended Taylor principle requirement is met. |
| Subjects: | | Determinacy New-Keynesian wage and price Phillips curves variable period length continuous-time limit Taylor principle |
| JEL: | | E52 E32 E31 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Economics Working Papers, Department of Economics, CAU Kiel
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