Constant interest rate projections without the curse of indeterminacy
AbstractConstant interest rate (CIR) projections are often criticized on the grounds that they are inconsistent with the existence of a unique equilibrium in a variety of forward-looking models. This note shows how to construct CIR projections that are not subject to that criticism, using a standard New Keynesian model as a reference framework.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1057.
Date of creation: Aug 2007
Date of revision: Feb 2008
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Web page: http://www.econ.upf.edu/
Interest rate peg; in.ation targeting; conditional forecasts; interest rate rules; multiple equilibria;
Find related papers by JEL classification:
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-10 (All new papers)
- NEP-CBA-2007-11-10 (Central Banking)
- NEP-MAC-2007-11-10 (Macroeconomics)
- NEP-MON-2007-11-10 (Monetary Economics)
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