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Monetary policy as equilibrium selection Author info | Abstract | Publisher info | Download info | Related research | Statistics Gaetano Antinolfi
Costas Azariadis
James B. Bullard
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Can monetary policy guide expectations toward desirable outcomes when equilibrium and welfare are sensitive to alternative, commonly held rational beliefs? This paper studies this question in an exchange economy with endogenous debt limits in which dynamic complementarities between dated debt limits support two Pareto-ranked steady states: a suboptimal, locally stable autarkic state and a constrained optimal, locally unstable trading state. The authors identify feedback policies that reverse the stability properties of the two steady states and ensure rapid convergence to the constrained optimal state.
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Article provided by Federal Reserve Bank of St. Louis in its journal Review .
Volume (Year): (2007)
Issue (Month): Jul ()
Pages: 331-342
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Handle: RePEc:fip:fedlrv:y:2007:i:jul:p:331-342:n:v.89no.4Contact details of provider: Postal: P.O. Box 442, St. Louis, MO 63166 Fax: (314)444-8753 Web page: http://www.stlouisfed.org/ More information through EDIRC
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Keywords: Monetary policy ; Equilibrium (Economics) ; Other versions of this item:
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Patrick A. Pintus, 2008.
"Laffer traps and monetary policy ,"
Review ,
Federal Reserve Bank of St. Louis, issue May, pages 165-174.
[Downloadable!]
Peter N. Ireland, 2007.
"Commentary on "Monetary policy as equilibrium selection" ,"
Review ,
Federal Reserve Bank of St. Louis, issue Jul, pages 343-348.
[Downloadable!]
Gaetano Antinolfi & Costas Azariadis & James B. Bullard, 2007.
"The optimal inflation target in an economy with limited enforcement ,"
Working Papers
2007-037, Federal Reserve Bank of St. Louis.
[Downloadable!]
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