How to order
IMF Publications

Working Papers in full text
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All


Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile



Interest Rate Rules, Endogenous Cycles, and Chaotic Dynamics in Open Economies

Author/Editor: Airaudo, Marco | Zanna, Luis-Felipe
Authorized for Distribution: May 1, 2012
Electronic Access: Free Full Text (PDF file size is 1,972KB)
Use the free Adobe Acrobat Reader to view this PDF file.
 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

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.
 
Order a print copy
Series: Working Paper No. 12/121
Subject(s): Business cycles | Economic models | Flexible pricing policy | Interest rates | International trade | Monetary policy | Real effective exchange rates
Author's keyword(s): Small Open Economy; Interest Rate Rules; Taylor Rules; Multiple Equilibria; Chaos; Cycles and Endogenous Fluctuations.
 
English  
    Published:   May 1, 2012        
            Format:   Paper
    Stock No:   WPIEA2012121   Pages:   39
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
Please address any questions about this title to publications@imf.org.