Article Dans Une Revue Macroeconomic Dynamics Année : 2021

Hopf Bifurcation from new-Keynesian Taylor rule to Ramsey Optimal Policy

Résumé

This paper compares different implementations of monetary policy in a new-Keynesian setting. We can show that a shift from Ramsey optimal policy under short-term commitment (based on a negative feedback mechanism) to a Taylor rule (based on a positive feedback mechanism) corresponds to a Hopf bifurcation with opposite policy advice and a change of the dynamic properties. This bifurcation occurs because of the ad hoc assumption that interest rate is a forward-looking variable when policy targets (inflation and output gap) are forward-looking variables in the new-Keynesian theory.

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Dates et versions

hal-01527872 , version 1 (25-05-2017)
hal-01527872 , version 2 (17-02-2020)

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Jean-Bernard Chatelain, Kirsten Ralf. Hopf Bifurcation from new-Keynesian Taylor rule to Ramsey Optimal Policy. Macroeconomic Dynamics, 2021, 25 (8), pp.2204-2236. ⟨10.1017/S1365100519001032⟩. ⟨hal-01527872v2⟩
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