ACTIVE MONETARY-POLICY AND INSTABILITY IN A PHILLIPS-CURVE SYSTEM

Authors
MONTORO JD PAZ JV ROIG M
Citation
Jd. Montoro et al., ACTIVE MONETARY-POLICY AND INSTABILITY IN A PHILLIPS-CURVE SYSTEM, Journal of macroeconomics, 20(4), 1998, pp. 843-856
Citations number
22
Categorie Soggetti
Economics
Journal title
Journal of macroeconomics → ACNP
ISSN journal
01640704
Volume
20
Issue
4
Year of publication
1998
Pages
843 - 856
Database
ISI
SICI code
0164-0704(1998)20:4<843:AMAIIA>2.0.ZU;2-A
Abstract
The presence of nonlinearities in a Phillips curve system yields to co mplex dynamics, i.e., cyclical behavior that may (under some parametri c set) become chaotic. This paper extends these conclusions by includi ng an active monetary policy. We show how stabilization policy may lea d to amplified instabilities and that agents' expectations tend to pla y a key role in the amount of these instabilities.