Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/53772 
Authors: 
Year of Publication: 
2009
Series/Report no.: 
Bank of Canada Working Paper No. 2009-8
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper proposes a simple analytical method to determine the stationarity of an unnormalized variable from the solution to a normalized model i.e. a model whose variables must be expressed in relative terms or must be differenced for a solution to exist. The paper then applies the methodto answer a question of interest to policy-makers: does optimal policy under commitment lead to stationarity in the price level? Unlike Gaspar, Smets, and Vestin (2007), the paper finds that optimal policy under commitment does not lead to price level stationarity in the Smets and Wouters (2003) model.
Subjects: 
Monetary policy framework
JEL: 
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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