The Indeterminacy of Determinacy with Fiscal, Macro-prudential or Taylor Rules
Résumé
The determinacy of dynamic stochastic general equilibrium models including fiscal, macro-prudential or Taylor rules relies on the assumption that policy instruments are forward-looking when policy targets are also forward-looking. Blanchard and Kahn (1980) determinacy condition does not forbid to assume that policy instruments are backward-looking when policy targets are forward-looking, as it is the case for Ramsey optimal policy under quasi-commitment. There is indeterminacy of determinacy unless six criteria are considered which are in favor of assuming that
policy instruments are backward-looking when policy targets are forward-looking.
Origine : Fichiers produits par l'(les) auteur(s)
Loading...