The unbearable lightness of equilibria in a low interest rate environment

A-Tier
Journal: Journal of Monetary Economics
Year: 2022
Volume: 127
Issue: C
Pages: 1-17

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

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

Abstract

Structural models with no solution are incoherent, and those with multiple solutions are incomplete. We show that models with occasionally binding constraints are not generically coherent. Coherency requires restrictions on the parameters or on the support of the distribution of the shocks. In presence of multiple shocks, the support restrictions cannot be independent from each other, so the assumption of orthogonality of structural shocks is incompatible with coherency. Models whose coherency is based on support restrictions are generically incomplete, admitting a very large number of minimum state variable solutions.

Technical Details

RePEc Handle
repec:eee:moneco:v:127:y:2022:i:c:p:1-17
Journal Field
Macro
Author Count
2
Added to Database
2026-01-24