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Farmer, Roger E. A.,
Daniel F. Waggoner, and
Tao Zha. 2010. "Generalizing the Taylor Principle: Comment."
,
100(1): 608-17.
Show Article Details
DOI: 10.1257/aer.100.1.608
Abstract:Troy Davig and Eric Leeper (2007) have proposed a condition they call the generalized Taylor principle to rule out indeterminate equilibria in a version of the new-Keynesian
model where the parameters of the policy rule follow a Markov-switching process. We show that although their condition rules out a subset of indeterminate equilibria, it does not establish uniqueness of the fundamental equilibrium. We discuss the differences between indeterminate fundamental equilibria included by Davig and Leeper's condition and fundamental equilibria that their condition misses. (E12, E31, E43, E52)
Authors:
Farmer, Roger E. A. (UCLA)
Waggoner, Daniel F. (Federal Reserve Bank of Atlanta)
Zha, Tao (Federal Reserve Bank of Atlanta and Emory U)
JEL Classifications:
E12: General Aggregative Models: Keynes; Keynesian; Post-Keynesian
E31: Price Level; Inflation; Deflation
E43: Interest Rates: Determination, Term Structure, and Effects
E52: Monetary Policy
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