Description 
1 online resource (40 pages) : illustrations 
Series 
IMF working paper ; WP/12/121 

IMF working paper ; WP/12/121.

Contents 
Cover; Table of Contents; I. Introduction; II. A FlexiblePrice Model; A. The HouseholdFirm Unit; B. The Government; C. International Capital Markets; D. Equilibrium; III. Local and Global Dynamics; A. Local Determinacy; B. Cycles and Chaos; B.1. The Main Results from a Global Nonlinear Analysis; Tables; Table 1. Local versus Global Analysis; Table 2. Parametrization; Figures; Figure 1. Local and Global Equilibrium Analyses for ForwardLooking Rules; Figure 2. OrbitBifurcation Diagrams for the Degree of Openness; Figure 3. Lyapunov Exponents for ForwardLooking Rules 

B.2. An Intuition of the ResultsTable 3. Openness, Risk Aversion, and Cycles; B.3. Policy Activism and the Degree of Openness; Table 4. Activism, Cycles, and Chaos; Figure 4. Basins of Attraction for ForwardLooking Rules; IV. Extensions and Robustness; A. Incomplete Exchange Rate PassThrough; B. Incomplete Markets; Figure 5. OrbitBifurcation Diagrams for the Degree of Exchange Rate PassThrough; C. Alternative Timings for the Policy Rule; D. CashinAdvance Timing of Money in Utility; E. ConstantElasticityofSubstitution (CES) Preference 

Figure 6. OrbitBifurcation Diagrams with CES PreferencesF. ConstantReturntoScale (CRS) Technologies; V. Conclusions; Appendix; A. Proofs and Propositions; A.1. Proof of Proposition 1; A.2. Proof of Proposition 2; A.3. Proof of Proposition 3; Figure 7. The mapping R[(sub(t+1)] = f(R[sub(t)]) for ForwardLooking Rules; A.4. Proof of Proposition 5; B. Contemporaneous Rules; Figure 8. The implicit mapping R[(sub(t+1)] = f(R[sub(t)]) for Contemporaneous Rules; C. BackwardLooking Rules; D. Nominal Price Rigidities; E. Money in the Utility Function versus Money in the Production Function 
Summary 
We present an extensive analysis of the consequences for global equilibrium determinacy in flexibleprice 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 
Bibliography 
Includes bibliographical references 
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


Finance.


Business & Economics.


Credit, Debt & Loans.

Form 
Electronic book

Author 
Zanna, LuisFelipe, author.


International Monetary Fund. Research Department, issuing body.

ISBN 
9781475503500 

1475503504 
