Interest rate rules, endogenous cycles, and chaotic dynamics in open economies /

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Bibliographic Details
Author / Creator:	Airaudo, Marco, author.
Imprint:	[Washington, D.C.] : International Monetary Fund, ©2012.
Description:	1 online resource (40 pages) : illustrations.
Language:	English
Series:	IMF working paper ; WP/12/121 IMF working paper ; WP/12/121.
Subject:	Interest rates -- Econometric models. Equilibrium (Economics) -- Econometric models. Business cycles -- Econometric models. Business cycles -- Econometric models. Equilibrium (Economics) -- Econometric models. Interest rates -- Econometric models. Electronic books.
Format:	E-Resource Book
URL for this record:	http://pi.lib.uchicago.edu/1001/cat/bib/12500234

Hidden Bibliographic Details
Other authors / contributors:	Zanna, Luis-Felipe, author. International Monetary Fund. Research Department, issuing body.
ISBN:	9781475503500 1475503504
Notes:	Includes bibliographical references.
Summary:	We present an extensive analysis of the consequences for global equilibrium determinacy in flexible-price open economies of implementing active interest rate rules, i.e., monetary rules where the nominal interest rate responds more than proportionally to inflation. We show that conditions under which these rules generate aggregate instability by inducing liquidity traps, endogenous cycles, and chaotic dynamics depend on specific characteristics of open economies. In particular, rules that respond to expected future inflation are more prone to induce endogenous cyclical and chaotic dynamics the more open the economy to trade.

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