Home > Research > Publications & Outputs > Determinacy analysis in high order dynamic systems

Links

Text available via DOI:

View graph of relations

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

Research output: Contribution to Journal/MagazineJournal articlepeer-review

Published
Close
<mark>Journal publication date</mark>31/10/2017
<mark>Journal</mark>Economics Letters
Volume159
Number of pages6
Pages (from-to)82-87
Publication StatusPublished
Early online date30/06/17
<mark>Original language</mark>English

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.