Global and local determinacy in a one-step forward looking New Keynesian model |
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Authors: | Alessandra Cornaro Anna Agliari |
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Affiliation: | a Dept. Discipline Matematiche, Finanza Matematica ed Econometria, Università Cattolica del Sacro Cuore, Largo Gemelli, 1, 20123, Milano, Italyb Dept. Scienze Economiche e Sociali, Università Cattolica del Sacro Cuore, Via Emilia Parmense 84, 29100, Piacenza, Italy |
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Abstract: | In this paper we consider a New Keynesian model for optimal monetary policy in a staggered fashion. We provide the relations of a non linear model of general economic equilibrium, implementing a suitable Taylor-type interest rate rule. We characterize the conditions that guarantee local determinacy and explore conditions under which local bifurcations of the target equilibrium may occur. Afterwards, we argue how local determinacy might be associated with global indeterminacy, providing some numerical examples. |
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Keywords: | C62 E52 C61 E43 |
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