Monetary Policy Frameworks and Real Equilibrium Determinacy
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Monetary Policy Frameworks and Real Equilibrium Determinacy. / Jensen, Henrik.
University of Copenhagen, 2002.Research output: Working paper › Research
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TY - UNPB
T1 - Monetary Policy Frameworks and Real Equilibrium Determinacy
AU - Jensen, Henrik
N1 - Jel Classification: E42; E52; F58
PY - 2002/2
Y1 - 2002/2
N2 - In a simple "prototype" model of monetary policymaking, I examine the issue of real equilibrium determinacy under targeting and instrument rules. The former framework involves minimization of a loss function (under discretion or commitment), whereas the latter involves commitment to an interest rate rule. While instrument rules only lead to determinacy under certain conditions, the targeting rules under consideration always secure determinacy. Within an extended model, I argue that econometric estimations of nominal interest rate response functions may tell little about the economy's stability properties. Instead, they could reveal whether targeting-rule based policy is performed under discretion or commitment
AB - In a simple "prototype" model of monetary policymaking, I examine the issue of real equilibrium determinacy under targeting and instrument rules. The former framework involves minimization of a loss function (under discretion or commitment), whereas the latter involves commitment to an interest rate rule. While instrument rules only lead to determinacy under certain conditions, the targeting rules under consideration always secure determinacy. Within an extended model, I argue that econometric estimations of nominal interest rate response functions may tell little about the economy's stability properties. Instead, they could reveal whether targeting-rule based policy is performed under discretion or commitment
M3 - Working paper
BT - Monetary Policy Frameworks and Real Equilibrium Determinacy
CY - University of Copenhagen
ER -
ID: 50678517