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dc.contributor.authorKing, Robert G.en_US
dc.contributor.authorWolman, Alexander L.en_US
dc.date.accessioned2006-08-01en_US
dc.date.accessioned2009-07-24T13:47:29Z-
dc.date.available2009-07-24T13:47:29Z-
dc.date.issued2004en_US
dc.identifier.piurn:nbn:de:hebis:30-10732-
dc.identifier.urihttp://hdl.handle.net/10419/25443-
dc.description.abstractIn a plain-vanilla New Keynesian model with two-period staggered price-setting, discretionary monetary policy leads to multiple equilibria. Complementarity between the pricing decisions of forward-looking firms underlies the multiplicity, which is intrinsically dynamic in nature. At each point in time, the discretionary monetary authority optimally accommodates the level of predetermined prices when setting the money supply because it is concerned solely about real activity. Hence, if other firms set a high price in the current period, an individual firm will optimally choose a high price because it knows that the monetary authority next period will accommodate with a high money supply. Under commitment, the mechanism generating complementarity is absent: the monetary authority commits not to respond to future predetermined prices. Multiple equilibria also arise in other similar contexts where (i) a policymaker cannot commit, and (ii) forward-looking agents determine a state variable to which future policy responds.en_US
dc.language.isoengen_US
dc.publisherCenter for Financial Studies Frankfurt, Mainen_US
dc.relation.ispartofseriesCFS Working Paper 2004/22en_US
dc.subject.jelE5en_US
dc.subject.jelE61en_US
dc.subject.jelD78en_US
dc.subject.ddc330en_US
dc.subject.keywordMonetary Policyen_US
dc.subject.keywordDiscretionen_US
dc.subject.keywordTime-Consistencyen_US
dc.subject.keywordMultiple Equilibriaen_US
dc.subject.keywordComplementarityen_US
dc.subject.stwUngleichgewichtstheorieen_US
dc.subject.stwPreisrigiditäten_US
dc.subject.stwGeldpolitiken_US
dc.subject.stwDiskretionäre Politiken_US
dc.subject.stwGleichgewichtsstabilitäten_US
dc.subject.stwTheorieen_US
dc.titleMonetary discretion, pricing complementarity and dynamic multiple equilibriaen_US
dc.typeWorking Paperen_US
dc.identifier.ppn515163325en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
dc.identifier.repecRePEc:zbw:cfswop:200422-
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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