Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098532 | Journal of Economic Dynamics and Control | 2014 | 8 Pages |
Abstract
We prove that the Generalized Taylor Principle, under which the nominal interest rate reacts more than one-for-one to a change in inflation in the long run, is a necessary and (under some extra mild restrictions on parameters) sufficient condition for determinacy in a sticky price model with interest rate smoothing in monetary policy, partial dynamic price indexation, and habit formation in consumption.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Saroj Bhattarai, Jae Won Lee, Woong Yong Park,