Template-Type: ReDIF-Paper 1.0
Author-Name:  Alessandra Cornaro
Author-X-Name-First: Alessandra
Author-X-Name-Last: Cornaro
Author-Email:  alessandra.cornaro@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica
Author-Name:  Anna Agliari
Author-X-Name-First: Anna
Author-X-Name-Last: Agliari
Author-Email:  anna.agliari@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica
Title:  Determinacy and sunspots in a nonlinear monetary model 
Abstract:  In this paper we analyze a basic sticky price model with monopolistic competition and price stickiness à la Calvo. 
Starting by the relations describing a general economic equilibrium model (see Woodford in Interest and Prices, Foundations of a Theory of Monetary Policy, The MIT Press, 2003), 
as it results from the optimizing behavior of the private agents, we provide a nonlinear model for the monetary policy analysis. 
This kind of model is a candidate for the existence of multiple equilibria, with a dependence of exogenous sunspots. 
We explore the stability of such a model combined with interest rate rules in order to investigate the determinacy of the model and we find, 
for some policy and elasticity parameters, the conditions under which it is possible.
Length:  18 pages
Creation-Date:  2010-02
Publication-Status: Published in Review of Economics, March 2010, pages nn1-nn2
File-URL: http://www.unicatt.it/dipartimenti/DISES/allegati/dises1060.pdf
File-Format: Application/pdf
File-Function: First version, 2010
Number: dises1060
Classification-JEL: E52; C62
Keywords: Monetary policy; Nonlinear models; Determinacy; Sunspots
Handle: RePEc:ctc:serie2:dises1060