Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098569 | Journal of Economic Dynamics and Control | 2014 | 9 Pages |
Abstract
In the presence of capital accumulation the Taylor principle may not be sufficient for determinacy under reasonable parameter values. In this paper I consider a two-sector extension of the models used in the existing literature. I show that what matters for whether the Taylor principle is sufficient is the price stickiness of investment goods. Price stickiness of consumer goods on the other hand matters very little. The Taylor principle is sufficient, I find, unless there is considerable price stickiness in the investment-goods sector.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Tommy Sveen,