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Financial factors and monetary policy: Determinacy and learnability of equilibrium

Kitney, Paul


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
Source: Journal of Economic Dynamics and Control
DOI: 10.1016/j.jedc.2018.01.044


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