Journal article
Interest rate rules, endogenous cycles, and chaotic dynamics in open economies
Journal of economic dynamics & control, v 36(10), pp 1566-1584
Oct 2012
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We present an extensive analysis of the consequences for global equilibrium determinacy in flexible-price open economies of implementing active interest rate rules, i.e., monetary rules where the nominal interest rate responds more than proportionally to inflation. We show that conditions under which these rules generate aggregate instability by inducing liquidity traps, endogenous cycles, and chaotic dynamics depend on specific characteristics of open economies. In particular, rules that respond to expected future inflation are more prone to induce endogenous cyclical and chaotic dynamics the more open the economy to trade.
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Details
- Title
- Interest rate rules, endogenous cycles, and chaotic dynamics in open economies
- Creators
- Marco Airaudo - Drexel UniversityLuis-Felipe Zanna - International Monetary Fund
- Publication Details
- Journal of economic dynamics & control, v 36(10), pp 1566-1584
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000307626900009
- Scopus ID
- 2-s2.0-84863880609
- Other Identifier
- 991019168578004721
UN Sustainable Development Goals (SDGs)
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Source: SDGs in the Output
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- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Economics