蝌蚪网

This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. 蝌蚪网
  3. 蝌蚪网 Review
  4. March 2001
  5. Monetary Policy and Multiple Equilibria

蝌蚪网 Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Monetary Policy and Multiple Equilibria

  • Jess Benhabib
  • Stephanie Schmitt-Groh茅
  • Mart铆n Uribe
蝌蚪网 Review
vol. 91, no. 1, March 2001
(pp. 167–186)
Download Full Text PDF

Abstract

This paper characterizes conditions under which interest-rate feedback rules that set the nominal interest rate as an increasing function of the inflation rate induce aggregate instability by generating multiple equilibria. It shows that these conditions depend not only on the monetary-fiscal regime (as emphasized in the fiscal theory of the price level) but also on the way in which money is assumed to enter preferences and technology. It provides a number of examples in which, contrary to what is commonly believed, active monetary policy gives rise to multiple equilibria and passive monetary policy renders the equilibrium unique.

Citation

Benhabib, Jess, Stephanie Schmitt-Groh茅, and Mart铆n Uribe. 2001. "Monetary Policy and Multiple Equilibria." 蝌蚪网 Review 91 (1): 167–186. DOI: 10.1257/aer.91.1.167

JEL Classification

  • E52 Monetary Policy
  • E31 Price Level; Inflation; Deflation
  • E63 Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization Policy