Determinacy analysis in high order dynamic systems:The case of nominal rigidities and limited asset market participation

Ascari, G. and Colciago, A. and Rossi, L. (2017) Determinacy analysis in high order dynamic systems:The case of nominal rigidities and limited asset market participation. Economics Letters, 159. pp. 82-87. ISSN 0165-1765

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Abstract

We show how to use Hurwitz polynomials to study the stability and uniqueness of Rational Expectation equilibria (REE) in Dynamic General Equilibrium models (DGE). We apply this method to a model characterized by sticky wages and prices and by limited asset market participation (LAMP). We prove analytically in a fourth-order dynamics system that, once nominal wage stickiness is taken into account, LAMP does not invalidate the Taylor Principle.

Item Type:
Journal Article
Journal or Publication Title:
Economics Letters
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2002
Subjects:
ID Code:
160484
Deposited By:
Deposited On:
08 Oct 2021 14:05
Refereed?:
Yes
Published?:
Published
Last Modified:
08 Oct 2021 14:05