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In literature, several works are focused on monetary policy models whose aim is the analysis of the stability of systems where private sector expectations are involved. The macroeconomic context is represented by a forward-looking model, derived from a dynamic stochastic general equilibrium framework where the agents behave optimally. The largest part of these models are presented as a simplified version of a more general context, obtained by log-linearizing the equilibrium relations in order to study small fluctuations around the steady-state. This book, departing from this starting point, tries to go beyond the log-linearized model, providing a nonlinear framework in order to establish the conditions for a unique path converging to the steady-state stationary solution, either the so called determinacy.

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Alessandra Cornaro, Ph.D in Quantitative Methods for Economic Analysis, is research associate at Department of Mathematics, Financial Mathematics and Econometrics at Catholic University of Milan.

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