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A new Keynesian model with delay: Monetary policy lag and determinacy of equilibrium

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  • Eiji Tsuzuki

Abstract

We investigate the effects of a monetary policy lag on equilibrium determinacy by using a New Keynesian (NK) continuous-time framework. If the lag is not very large, the result obtained will not be different from the standard one: an active monetary policy attains local equilibrium determinacy, which is a policy norm known as the Taylor principle. However, if the lag is sufficiently large, then no equilibrium will exist.

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  • Eiji Tsuzuki, 2014. "A new Keynesian model with delay: Monetary policy lag and determinacy of equilibrium," Economic Analysis and Policy, Elsevier, vol. 44(3), pages 279-291.
    • Handle: RePEc:eee:ecanpo:v:44:y:2014:i:3:p:279-291
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    Cited by:

    1. Shunsuke Shinagawa & Eiji Tsuzuki, 2019. "Policy Lag and Sustained Growth," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 5(3), pages 403-431, October.
    2. Khalid, Norlin, 2018. "Monetary and Fiscal Regimes Policy Rules in a Discrete Time Model," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 52(2), pages 95-108.
    3. Eiji Tsuzuki, 2016. "Fiscal policy lag and equilibrium determinacy in a continuous-time New Keynesian model," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(3), pages 215-232, September.

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