Hopf bifurcation in the Clarida, Gali, and Gertler model
AbstractWe explore bifurcation phenomena in the open-economy New Keynesian model developed by Clarida, Gali and Gertler (2002). We find that the open economy framework can bring about more complex dynamics, along with a wider variety of qualitative behaviors and policy responses. Introducing parameters related to the open economy structure affects the values of bifurcation parameters and changes the location of bifurcation boundaries. As a result, the stratification of the confidence region, as previously seen in closed-economy New Keynesian models, remains an important research and policy risk to be considered in the context of the open-economy New Keynesian functional structures. In fact, econometrics and optimal policy design become more complex within an open economy. Dynamical inferences need to be qualified by the risk of bifurcation boundaries crossing the confidence regions. Without adequate prior econometric research, policy design needs to take into consideration that a change in monetary policy can produce an unanticipated bifurcation.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 40668.
Date of creation: 13 Aug 2012
Date of revision:
stability; bifurcation; open economy; New Keynesian; macroeconomics; dynamic systems;
Other versions of this item:
- William Barnett & Unal Eryilmaz, 2012. "Hopf Bifurcation in the Clarida, Gali, and Gertler Model," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201211, University of Kansas, Department of Economics, revised Sep 2012.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
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- Richard Clarida & Jordi Gali & Mark Gertler, 2002.
"A Simple Framework for International Monetary Policy Analysis,"
NBER Working Papers
8870, National Bureau of Economic Research, Inc.
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Elsevier, vol. 35(9), pages 1577-1585, September.
- Banerjee, Sanjibani & Barnett, William A. & Duzhak, Evgeniya A. & Gopalan, Ramu, 2011. "Bifurcation Analysis of Zellner's Marshallain Macroeconomic Model," MPRA Paper 30059, University Library of Munich, Germany.
- Sanjibani Banerjee & William Barnett & Evgeniya Duzhak & Ramu Gopalan, 2011. "Bifurcation Analysis of Zellner's Marshallian Macroeconomic Model," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201102, University of Kansas, Department of Economics, revised Apr 2011.
- William Barnett & Evgeniya Aleksandrovna Duzhak, 2008.
"Empirical Assessment of Bifurcation Regions within New Keynesian Models,"
WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS
200811, University of Kansas, Department of Economics, revised Oct 2008.
- William Barnett & Evgeniya Duzhak, 2010. "Empirical assessment of bifurcation regions within New Keynesian models," Economic Theory, Springer, vol. 45(1), pages 99-128, October.
- Barnett, William A. & Duzhak, Evgeniya A., 2008. "Empirical assessment of bifurcation regions within new Keynesian models," MPRA Paper 11249, University Library of Munich, Germany.
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