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Financial factors and monetary policy: Determinacy and learnability of equilibrium

Kitney, Paul

Description

We contribute to the debate on whether central banks should respond to financial factors in monetary policy rules, by evaluating equilibrium determinacy and E-stability in the presence of a financial accelerator. Policies responding to lagged asset prices either reduce the region of determinacy or E-stability in the parameter space. However, a response to current asset prices expands both regions of determinacy and E-stability. Policy rules reacting to credit volume constrict the determinacy...[Show more]

CollectionsANU Research Publications
Date published: 2018
Type: Journal article
URI: http://hdl.handle.net/1885/265535
Source: Journal of Economic Dynamics and Control
DOI: 10.1016/j.jedc.2018.01.044

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