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Technological change and monetary policy in a sticky-price model

  • Tsuzuki, Eiji
  • Inoue, Tomohiro
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    We developed a sticky-price model that introduces the factors of (a) the non-separability of consumption and labor in the utility function and (b) a technological change induced by the investment of profits, to analyze the determinacy of equilibrium. We found that while engaging in inflation targeting increases the probability of determinacy, engaging in share-price targeting decreases the probability of determinacy in a standard sticky-price model; engaging in both inflation targeting and share-price targeting can increase the probability of determinacy in our model.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1090944310000529
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    Article provided by Elsevier in its journal Research in Economics.

    Volume (Year): 65 (2011)
    Issue (Month): 3 (September)
    Pages: 180-194

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    Handle: RePEc:eee:reecon:v:65:y:2011:i:3:p:180-194
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622941

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    10. Takushi Kurozumi, 2006. "Determinacy and Expectational Stability of Equilibrium in a Monetary Sticky-Price Model with Taylor Rule," Bank of Japan Working Paper Series 06-E-2, Bank of Japan.
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