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The Taylor principle and global determinacy in a non Ricardian world

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  • Jean-Pascal Bénassy

    (PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, CEPREMAP - Centre pour la recherche économique et ses applications - ECO ENS-PSL - Département d'économie de l'ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres)

  • Michel Guillard

    (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne)

Abstract

The Taylor principle is quite usually considered as a central condition for price determinacy. Recently, however, this has been questioned on several grounds, notably because (i) this condition is a condition for local determinacy, not global determinacy (ii) it has been derived in "Ricardian" economies, and it appears that going to a non-Ricardian framework makes a very big difference for the determinacy conditions. In this paper we scrutinize the two issues together, and we find that for non-Ricardian equilibria the Taylor principle is replaced by another "financial dominance" criterion.

Suggested Citation

  • Jean-Pascal Bénassy & Michel Guillard, 2005. "The Taylor principle and global determinacy in a non Ricardian world," PSE Working Papers halshs-00590558, HAL.
    • Handle: RePEc:hal:psewpa:halshs-00590558
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00590558
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    References listed on IDEAS

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    More about this item

    Keywords

    Taylor principle; Taylor rules; global determinacy; price determinacy; non Ricardian economies; non Ricardian equilibria; Principe de Taylor; règles de Taylor; détermination globale; équilibres non Ricardiens; économies non Ricardiennes;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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