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| Jean Carlos Cortissoz |
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| ''Stability thresholds and oscillatory regimes in Taylor rule dynamics with firm heterogeneity'' |
| ( 2026, Vol. 46 No.2 ) |
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| We analyze the stability of Taylor rule dynamics in a heterogeneous economy with loan-dependent firms. We identify an explicit threshold ϕ_π^*
such that monetary policy stabilizes inflation if and only if the policy
coefficient lies in the bounded interval (1, ϕ_π^*). The threshold
depends on the share of loan-dependent firms and their
interaction strength. When a nonlinear Phillips curve is introduced, crossing the threshold produces a stable limit cycle rather than divergence. |
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| Keywords: Taylor rules, inflation stability, firm heterogeneity,
dynamical systems, monetary policy, limit cycles |
JEL: E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
C6 - Mathematical Methods and Programming: General |
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| Manuscript Received : Apr 27 2026 | | Manuscript Accepted : Jun 30 2026 |
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