Kobayashi, Teruyoshi and Muto, Ichiro (2009): Expectational stability under non-zero trend inflation.
Download (1MB) | Preview
This study examines the expectational stability of the rational expectation equilibria(REE) under Taylor rules when trend inflation is non-zero. We find that whether or not a higher (lower) trend inflation makes the REE more (less) unstable depends largely on the data (such as contemporaneous data, forecasts and lagged data) used in the conduct of monetary policy.
|Item Type:||MPRA Paper|
|Original Title:||Expectational stability under non-zero trend inflation|
|Keywords:||adaptive learning, E-stability, Taylor rule, trend inflation|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D84 - Expectations; Speculations
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level; Inflation; Deflation
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy
|Depositing User:||Ichiro Muto|
|Date Deposited:||03. Sep 2009 14:15|
|Last Modified:||20. Feb 2013 21:45|
Ascari, G. and T. Ropele, 2009, Trend inflation, Taylor principle and indeterminacy, Economic Working Papers no. 708, Economic Research Department, Bank of Italy (forthcoming in Journal of Money, Credit and Banking).
Ascari, G. and T. Ropele, 2007, Optimal monetary policy under low trend inflation, Journal of Monetary Economics 54, 2568-83.
Bullard, J. and K. Mitra, 2002, Learning about monetary policy rules, Journal of Monetary Economics 49, 1105-29.
Cogley, T. and A.M. Sbordone, 2008, Trend inflation, indexation, and inflation persistence in the new Keynesian Phillips curve, American Economic Review 98, 2101-26.
Evans, G.W. and S. Honkapohja, 2001, Learning and Expectations in Macroeconomics. Princeton University Press, Princeton, New Jersey.
Kiley, M.T., 2007, Is moderate-to-high inflation inherently unstable? International Journal of Central Banking 3, 173-201.
Sbordone, A.M., 2007, Inflation persistence: Alternative interpretation and policy implications,Journal of Monetary Economics 54, 1311-39.