Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/264710 
Year of Publication: 
2007
Series/Report no.: 
Working Paper No. 118
Publisher: 
Oesterreichische Nationalbank (OeNB), Vienna
Abstract: 
In this paper we analyze equilibrium determinacy in a sticky price model in which the pass-through from policy rates to retail interest rates is sluggish and potentially incomplete. In addition, we empirically characterize and compare the interest rate pass-through process in the euro area and the U.S. We find that if the pass-through is incomplete in the long run, the standard Taylor principle is insufficient to guarantee equilibrium determinacy. Our empirical analysis indicates that this result might be particularly relevant for bank-based financial systems as for instance that in the euro area.
Subjects: 
Interest Rate Pass-Through
Interest Rate Rules
Equilibrium Determinacy
Stability
JEL: 
E32
E52
E58
Document Type: 
Working Paper

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