Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217145 
Year of Publication: 
2019
Citation: 
[Journal:] Quantitative Economics [ISSN:] 1759-7331 [Volume:] 10 [Issue:] 1 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2019 [Pages:] 353-385
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
This paper determines conditions for the existence of a unique rational expectations equilibrium-determinacy-in a monetary policy switching economy. We depart from the existing literature by providing such conditions considering all bounded equilibria. We then apply these conditions to a new Keynesian model with switching Taylor rules. First, deviation from the Taylor principle in one regime does not necessarily cause indeterminacy. Second, very different responses to inflation may trigger indeterminacy even if both regimes satisfy the Taylor principle. Determinacy thus results from the adequacy between monetary regimes rather than the determinacy of each of them taken in isolation.
Subjects: 
Markov-switching
indeterminacy
monetary policy
JEL: 
E31
E43
E52
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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