Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25297
 Title: The natural rate hypothesis and real determinacy Authors: Meyer-Gohde, Alexander Issue Date: 2008 Series/Report no.: SFB 649 discussion paper 2008,054 Abstract: The uniqueness of bounded local equilibria under interest rate rules is analyzed in a model with sticky information `a la Mankiw and Reis (2002). The main results are tighter bounds on monetary policy than in sticky-price models, irrelevance of the degree of output-gap targeting for determinacy, independence of determinacy regions from parameters outside the interest-rate rule, and equivalence between real determinacy in models satisfying the natural rate hypothesis and nominal determinacy in the associated full-information, flex-price equivalent. The analysis follows from boundedness considerations on the nonautonomous recursion that describe the MA(\infty) representation of variables’ reaction to endogenous fluctuations. Subjects: Nonautonomous difference equationsindeterminacyTaylor rulesticky informationsticky prices JEL: C62E31E52E58E61 Document Type: Working Paper Appears in Collections: SFB 649 Discussion Papers, HU Berlin

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