Expectational stability under non-zero trend inflation
AbstractThis study examines the expectational stability of the rational expectation equilibria(REE) under Taylor rules when trend inflation is non-zero. We find that whether or not a higher (lower) trend inflation makes the REE more (less) unstable depends largely on the data (such as contemporaneous data, forecasts and lagged data) used in the conduct of monetary policy.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 17082.
Date of creation: 03 Sep 2009
Date of revision:
adaptive learning; E-stability; Taylor rule; trend inflation;
Find related papers by JEL classification:
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-05 (All new papers)
- NEP-CBA-2009-09-05 (Central Banking)
- NEP-MAC-2009-09-05 (Macroeconomics)
- NEP-MIC-2009-09-05 (Microeconomics)
- NEP-MON-2009-09-05 (Monetary Economics)
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