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Study Findings from Texas A&M University Provide New Insights into Macroeconomics (Interest Rate Rules And Equilibrium Stability Under Deep...

August 8, 2014



Study Findings from Texas A&M University Provide New Insights into Macroeconomics (Interest Rate Rules And Equilibrium Stability Under Deep Habits)

By a News Reporter-Staff News Editor at Economics Week -- Current study results on Macroeconomics have been published. According to news reporting from College Station, Texas, by VerticalNews editors, the research stated, "This paper studies the determinacy of equilibrium in a new Keynesian model with deep habits under different interest rate rules. The main finding is that an interest rate rule satisfying the Taylor principle is no longer a sufficient condition to guarantee determinacy."

The news correspondents obtained a quote from the research from Texas A&M University, "Including interest rate smoothing and a response to output deviations from steady state significantly enlarges the regions of determinacy. However, under all the simple interest rate rules considered, determinacy is not guaranteed for a very high degree of deep habits. Deep habits give rise to countercyclical markups, which is in line with empirical evidence and makes them an appealing feature in the study of demand shocks."

According to the news reporters, the research concluded: "The countercyclicality of markups also leads to multiple equilibria because of self-fulfilling expectations for a high degree of deep habit formation."

For more information on this research see: Interest Rate Rules And Equilibrium Stability Under Deep Habits. Macroeconomic Dynamics, 2014;18(1):23-40. Macroeconomic Dynamics can be contacted at: Cambridge Univ Press, 32 Avenue Of The Americas, New York, NY 10013-2473, USA. (Cambridge University Press - www.cambridge.org; Macroeconomic Dynamics - journals.cambridge.org/action/displayJournal?jid=MDY)

Our news journalists report that additional information may be obtained by contacting S. Zubairy, Texas A&M University, College Stn, TX 77843, United States.

Keywords for this news article include: Texas, United States, Macroeconomics, College Station, North and Central America

Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC


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Source: Economics Week


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