A note on expectational stability under non-zero trend inflation
Teruyoshi Kobayashi and
Ichiro Muto
MPRA Paper from University Library of Munich, Germany
Abstract:
This study examines the expectational stability of the rational expectations equilibria (REE) under alternative Taylor rules when trend inflation is non-zero. We find that when trend inflation is high, the REE is likely to be expectationally unstable. This result holds true regardless of the nature of the data (such as contemporaneous data, forecast, and lagged data) introduced in the Taylor rule. Our results suggest that a high macroeconomic volatility during the period of high trend inflation can be well explained by introducing the concept of expectational stability.
Keywords: adaptive learning; E-stability; Taylor rule; trend inflation (search for similar items in EconPapers)
JEL-codes: D84 E31 E52 (search for similar items in EconPapers)
Date: 2010-05-28
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/22952/1/MPRA_paper_22952.pdf original version (application/pdf)
Related works:
Journal Article: A NOTE ON EXPECTATIONAL STABILITY UNDER NONZERO TREND INFLATION (2013)
Working Paper: A note on expectational stability under non-zero trend inflation (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:22952
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().