Labor Market Frictions, Indeterminacy, and Interest Rate Rules,10.1353/mcb.2006.0098,Journal of Money Credit and Banking,Francesco Zanetti

Labor Market Frictions, Indeterminacy, and Interest Rate Rules (Citations: 2)


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This paper studies the emergence of indeterminate equilibria in a standard New Keynesian model characterized by labor market frictions, under a policy rule that reacts strictly to inflation. Given labor market frictions, monetary policy may not be able to prevent aggregate fluctuations from being driven solely by self-fulfilling expectations. This is not, though, a result that holds under all circumstances: a monetary policy that reacts to some average measures of inflation or to the output gap may guarantee determinacy in the economy.

Journal: Journal of Money Credit and Banking - J MONEY CREDIT BANKING , vol. 38, no. 7, pp. 1959-1970, 2006

DOI: 10.1353/mcb.2006.0098

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Keywords (7)

Labor Market Frictions, Indeterminacy, and Interest Rate Rules,10.1353/mcb.2006.0098,Journal of Money Credit and Banking,Francesco Zanetti

References (15)

Complementarity of Labor Market Institutions, Equilibrium Unemployment and the Propagation of Business Cycles (Citations: 10)

Staggered prices in a utility-maximizing framework (Citations: 2301)

Forward vs. Backward-Looking Taylor Rules (Citations: 19)

Timing and Real Indeterminacy in Monetary Models (Citations: 79)

Investment and interest rate policy: a discrete time analysis (Citations: 64)

Citations (2)

Labor market search and interest rate policy (Citations: 1)

Bubble-free interest-rate rules (Citations: 17)


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