Sticky Information and Determinacy
The infinite-dimensional sticky-information Phillips curve is cast as a finite-dimensional timevarying system of difference equations in order to directly assess determinacy in the model with demand given by the forward-looking IS equation and monetary policy by an interest rate rule. An equivalence to the model without lagged expectations holds (albeit tenuously) for the particular specification and a common truncation method produces spurious determinacy.
|Date of creation:||Jan 2011|
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- Alexander Meyer-Gohde, 2007.
"Solving Linear Rational Expectations Models with Lagged Expectations Quickly and Easily,"
SFB 649 Discussion Papers
SFB649DP2007-069, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
- Meyer-Gohde, Alexander, 2010. "Linear rational-expectations models with lagged expectations: A synthetic method," Journal of Economic Dynamics and Control, Elsevier, vol. 34(5), pages 984-1002, May.
- Alexander Meyer-Gohde, 2007. "Matlab Code for Solving Linear Rational Expectation Models with Lagged Expectations Quickly and Easily," QM&RBC Codes 171, Quantitative Macroeconomics & Real Business Cycles, revised Apr 2010.
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