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Timing and Real Indeterminacy in Monetary Models, Working Paper 99-10R

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Timing and Real Indeterminacy in Monetary Models, Working Paper 99-10R

DATE: October 2001

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ABSTRACT: An increasingly common approach to the theoretical analysis of monetary policy is to ensure that a proposed policy does not introduce real indeterminacy and thus sunspot fluctuations into the model economy. Policy is typically conducted in terms of directives for the nominal interest rate. This paper uses a discrete-time money-in-the-utility function model to demonstrate how seemingly minor modifications in the trading environment result in dramatic differences in the policy restrictions needed to ensure real determinacy. These differences arise because of the differing pricing equations for the nominal interest rate.

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Carlstrom, Charles T., 1960- and Fuerst, Timothy Stephen, 1962-2017. "Timing and Real Indeterminacy in Monetary Models, Working Paper 99-10R," Working Paper (Federal Reserve Bank of Cleveland) (October 2001). https://fraser.stlouisfed.org/title/4494/item/628316, accessed on April 23, 2024.

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PUBLISHER: Federal Reserve Bank of Cleveland

PLACE: Cleveland

DIGITAL COPY SOURCE: Federal Reserve Bank of Cleveland

SUBJECTS: THEMES: CLASSIFICATION:
  • jel: D51
  • jel: E42
  • jel: E52

RIGHTS: In Copyright (InC)

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