Journal article
Monetary policy, stock prices, and consumption externalities
Economics letters, v 120(3), pp 537-541
Sep 2013
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We study interest rate rules responding to stock prices in a sticky-price sticky-wage New-Keynesian framework subject to consumption externalities. For given wage rigidity, such rules are beneficial to equilibrium determinacy if households’ preferences feature sufficiently strong keeping-up-with-the-Joneses externalities.
•Presents a New-Keynesian model with sticky wages and consumption externalities.•Studies determinacy properties of Taylor rules responding to stock prices.•Keeping-up-with-the-Joneses (KUJ) externalities help making dividends pro-cyclical.•Responding to stock prices improves determinacy if the KUJ externalities are sufficiently strong.
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Details
- Title
- Monetary policy, stock prices, and consumption externalities
- Creators
- Marco Airaudo - Drexel University
- Publication Details
- Economics letters, v 120(3), pp 537-541
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000323994500042
- Scopus ID
- 2-s2.0-84880259629
- Other Identifier
- 991019169106404721
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- Web of Science research areas
- Economics