Monetary policy and economic fluctuations in a sticky-price model

This paper examines a simple monetary optimizing model with sticky-prices. Two types of monetary policy rules are considered: constant money growth rules and interest-rate feedback (Taylor-type) rules. In the case of constant money growth rules, we show the existence of limit cycles through the Hopf bifurcation theorem. On the other hand, in the case of the interest-rate feedback rules, we show that active monetary policy leads to the determinacy of equilibrium path, while passive monetary policy induces economic fluctuations.