James Bullard and Kaushik Mitra (2004) Determinacy, Learnability, and Monetary Policy Inertia.
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We document that monetary policy inertia can help alleviate problems of indeterminacy and non-existence of stationary equilibrium observed for some commonly-studied monetary policy rules. We also find that inertia promotes learnability of equilibrium. The context is a simple, forward-looking model of the macroeconomy widely used in the rapidly expanding literature in this area. We conclude that this might be an important reason why central banks in the industrialized economies display considerable inertia when adjusting monetary policy in response to changing economic conditions.
This is a Accepted version This version's date is: 2004 This item is not peer reviewed
https://repository.royalholloway.ac.uk/items/f92379cb-a9dd-4285-ccad-be2ccebf6215/1/
Deposited by Leanne Workman (UXYL007) on 15-Oct-2012 in Royal Holloway Research Online.Last modified on 15-Oct-2012
©2004 James Bullard and Kaushik Mitra. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit including © notice, is given to the source.