ECIN Replication Package for "Inflation targeting, output stabilization, and real indeterminacy in monetary models with an interest rate rule"

Principal Investigator(s):  View help for Principal Investigator(s) Konstantin Platonov, Loyola Marymount University

Version:  View help for Version V2

Name File Type Size Last Modified
  replication_files 06/05/2024 03:17:PM
README.pdf application/pdf 120.3 KB 08/02/2024 12:55:PM

Project Citation: 

Platonov, Konstantin. ECIN Replication Package for “Inflation targeting, output stabilization, and real indeterminacy in monetary models with an interest rate rule.” Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2024-08-02. https://doi.org/10.3886/E204682V2

Project Description

Summary:  View help for Summary
Central banks set the nominal interest rate to target inflation and stabilize output. In monetary models, monetary policy affects output directly via the wealth effect. I show that in these models, the response of the central bank to fluctuations in output may induce real indeterminacy even if the Taylor principle is satisfied. I find that the determinacy conditions depend on the interest elasticity of output and generally, the Taylor principle is neither necessary nor sufficient for determinacy. This is in stark contrast with the New Keynesian model where a sufficiently strong policy response to inflation or output usually ensures determinacy.

The replication package contains the data used for calibration and Matlab programs used to obtain determinacy regions numerically.

Scope of Project

Subject Terms:  View help for Subject Terms macroeconomics; monetary policy; money; economic models
JEL Classification:  View help for JEL Classification
      E31 Price Level; Inflation; Deflation
      E32 Business Fluctuations; Cycles
      E58 Central Banks and Their Policies
Manuscript Number:  View help for Manuscript Number ECIN-Sep-2023-0389
Geographic Coverage:  View help for Geographic Coverage United States
Time Period(s):  View help for Time Period(s) 1997 – 2023
Collection Date(s):  View help for Collection Date(s) 6/4/2024 – 6/4/2024
Data Type(s):  View help for Data Type(s) aggregate data; program source code

Methodology

Data Source:  View help for Data Source U.S. Bureau of Economic Analysis

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Published Versions

V2 [2024-08-02]

V1 [2024-06-05]

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