Capital accumulation, sectoral heterogeneity and the Taylor principle

B-Tier
Journal: Journal of Economic Dynamics and Control
Year: 2014
Volume: 44
Issue: C
Pages: 20-28

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

In the presence of capital accumulation the Taylor principle may not be sufficient for determinacy under reasonable parameter values. In this paper I consider a two-sector extension of the models used in the existing literature. I show that what matters for whether the Taylor principle is sufficient is the price stickiness of investment goods. Price stickiness of consumer goods on the other hand matters very little. The Taylor principle is sufficient, I find, unless there is considerable price stickiness in the investment-goods sector.

Technical Details

RePEc Handle
repec:eee:dyncon:v:44:y:2014:i:c:p:20-28
Journal Field
Macro
Author Count
1
Added to Database
2026-01-29