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Discretionary Policy and Multiple Equilibria in LQ RE Models

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  • Tatiana Kirsanova

    (University of Exeter)

  • Andrew P. Blake

    (Bank of England)

Abstract

We study discretionary equilibria in dynamic linear-quadratic rational expectations models. In contrast to the assumptions that pervade this literature we show that these models do have multiple equilibria in some situations. We demonstrate the existence of multiple discretionary equilibria by example. We investigate general properties of discretionary equilibria.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 789.

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Date of creation: 2010
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Handle: RePEc:red:sed010:789

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