18/01/23
- Documents de travail
The presence of an occasionally binding constraint due to the effective lower bound
(ELB) in New Keynesian models generally gives rise to multiple equilibria under
active monetary policy. To restore uniqueness in the model with an active Taylor
Rule, we consider appropriate simple fiscal policy instruments. Without relaxing the
assumptions of Ricardian equivalence, full information, and rational expectations,
we show that appropriate fiscal targeting rules ensure that New Keynesian models
subject to the ELB possess a unique solution.
