Unique monetary equilibria with interest rate rules

Bernardino Adão; Isabel Correia; Pedro Teles

doi:10.1016/j.red.2009.11.003

Unique monetary equilibria with interest rate rules

Bernardino Adão, Isabel Correia, Pedro Teles^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

12 Citations (Scopus)

Abstract

In contrast to previous literature, we show that it is possible to use interest rate rules in standard monetary models to implement equilibria that are globally unique. This is a contribution to a literature that either concentrates on conditions for local determinacy, or criticizes that approach showing that local determinacy might be associated with global indeterminacy. The interest rate rules we propose are price level targeting rules that respond to the forecasts of the future price level and future economic activity.

Original language	English
Pages (from-to)	432-442
Number of pages	11
Journal	Review of Economic Dynamics
Volume	14
Issue number	3
DOIs	https://doi.org/10.1016/j.red.2009.11.003
Publication status	Published - Jul 2011

Keywords

Interest rate rules
Monetary policy
Price level targeting
Unique equilibrium

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This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.red.2009.11.003

Cite this

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abstract = "In contrast to previous literature, we show that it is possible to use interest rate rules in standard monetary models to implement equilibria that are globally unique. This is a contribution to a literature that either concentrates on conditions for local determinacy, or criticizes that approach showing that local determinacy might be associated with global indeterminacy. The interest rate rules we propose are price level targeting rules that respond to the forecasts of the future price level and future economic activity.",

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AB - In contrast to previous literature, we show that it is possible to use interest rate rules in standard monetary models to implement equilibria that are globally unique. This is a contribution to a literature that either concentrates on conditions for local determinacy, or criticizes that approach showing that local determinacy might be associated with global indeterminacy. The interest rate rules we propose are price level targeting rules that respond to the forecasts of the future price level and future economic activity.

KW - Interest rate rules

KW - Monetary policy

KW - Price level targeting

KW - Unique equilibrium

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Unique monetary equilibria with interest rate rules

Abstract

Keywords

UN SDGs

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