Discretionary Policy and Multiple Equilibria in LQ RE Models

MPRA Paper from University Library of Munich, Germany

Abstract: We study discretionary equilibria in dynamic linear-quadratic rational expectations models. In contrast to the assumptions that pervade this literature we show that these models do have multiple equilibria in some situations. We demonstrate the existence of multiple discretionary equilibria by example. We investigate general properties of discretionary equilibria and discuss implications for numerical algorithms.

Keywords: Time Consistency; Discretion; Multiple Equilibria; LQ RE models (search for similar items in EconPapers)
JEL-codes: C61 E31 E52 E58 E61 (search for similar items in EconPapers)
Date: 2006-11-09, Revised 2010-04-01
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Citations: View citations in EconPapers (27)

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Related works:
Journal Article: Discretionary Policy and Multiple Equilibria in LQ RE Models (2012)
Working Paper: Discretionary Policy and Multiple Equilibria in LQ RE Models (2010)
Working Paper: Discretionary Policy and Multiple Equilibria in LQ RE Models (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21901

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