Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
  1. Home
  2. Search

Refine search

Refine search

Access:
Content type:
Publication date:
Apply   From and To filters
Subject: Show more
Journals Show more
Publishers: Show more
Societies Show more
Series: Show more
Collections: Show more

Actions for selected content:

Select all | Deselect all
  • View selected items
  • Export citations
  • Download PDF (zip)
  • Save to Kindle
  • Save to Dropbox
  • Save to Google Drive

Save Search

You can save your searches here and later view and run them again in "My saved searches".

Please provide a title, maximum of 40 characters.
Cancel
×

1 results

  • LIMITED ASSET MARKET PARTICIPATION AND DETERMINACY IN THE OPEN ECONOMY

  • Edward F. Buffie, Luis-Felipe Zanna
  • Journal:
    Macroeconomic Dynamics / Volume 22 / Issue 8 / December 2018
    Published online by Cambridge University Press:
    03 July 2017, pp. 1937-1977

  • The perception that inflation targeting (IT) runs a high risk of indeterminacy when a significant share of households are too poor to save is an artifact of the closed economy. In the open economy, the Taylor principle is generally valid for both contemporaneous and forward-looking IT. Active policy in contemporaneous IT guarantees determinacy, eccentric cases aside. In forward-looking IT, the scope for active policy is constrained by an upper bound on the Taylor coefficient. The upper bound is insensitive, however, to the share of poor, nonsaving households. Moreover, it can be increased substantially–to a level that does not bind–through reserve sales/purchases that limit exchange rate volatility.