The Indeterminacy of Determinacy with Fiscal, Macro-prudential or Taylor Rules

Pré-publication, Document de travail: The determinacy of dynamic stochastic general equilibrium models including fiscal, macro-prudential or Taylor rules relies on the assumption that policy instruments are forward-looking when policy targets are also forward-looking. Blanchard and Kahn (1980) determinacy condition does not forbid to assume that policy instruments are backward-looking when policy targets are forward-looking, as it is the case for Ramsey optimal policy under quasi-commitment. There is indeterminacy of determinacy unless six criteria are considered which are in favor of assuming that policy instruments are backward-looking when policy targets are forward-looking.

Auteur(s)

Jean-Bernard Chatelain, Kirsten Ralf

Date de publication
  • 2018
Mots-clés JEL
B22 B23 B41 C52 E31 O41 O47
Mots-clés
  • Determinacy
  • Proportional Feedback rules
  • Dynamic Stochastic General Equilibrium
  • Taylor rule
  • Fiscal rule
  • Macro-prudential rule
  • Optimal control
  • Ramsey optimal policy under quasi-commitment
Référence interne
  • PSE Working Papers n°2018-45
Version
  • 1