Journal article
Learning, Monetary Policy, and Asset Prices
Journal of money, credit and banking, v 47(7), pp 1273-1307
01 Oct 2015
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We explore the stability properties of interest rate rules granting an explicit response to stock prices in a New Keynesian DSGE model where the presence of non-Ricardian households makes stock prices nonredundant for the business cycle. We find that responding to stock prices enlarges the policy space for which the equilibrium is both determinate and E-stable (learnable). In particular, the Taylor principle ceases to be necessary, and determinacy/E-stability is granted also by mildly passive policy rules. Our results appear to be more prominent in economies featuring a lower elasticity of substitution across differentiated products and/or more rigid labor markets.
Metrics
Details
- Title
- Learning, Monetary Policy, and Asset Prices
- Creators
- Marco Airaudo - Drexel UniversitySalvatore Nistico - Social and Economical SciencesLuis-Felipe Zanna - Research Department
- Publication Details
- Journal of money, credit and banking, v 47(7), pp 1273-1307
- Publisher
- Wiley
- Number of pages
- 35
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000362175000002
- Scopus ID
- 2-s2.0-84942516978
- Other Identifier
- 991019168878304721
UN Sustainable Development Goals (SDGs)
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics