Dictionary
Words, grammatical forms and meanings linked to the ontology.
divine coincidence en · NOUN
Meanings
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(countable, uncountable) The property of a (New Keynesian) macroeconomic model that stabilizing inflation and stabilizing the (relevant) output gap is equivalent.
In [the standard new Keynesian framework], stabilizing inflation is equivalent to stabilizing the welfare-relevant output gap. In this paper, we argue that this property of the new Keynesian framework, which we call the divine coincidence, is due to a special feature of the model […]
2007, Oliver Blanchard and Jordi Galí, Real Wage Rigidities and the New Keynesian Model, Journal of Money, Credit and Banking 39(s1), pp. 35--65Because credit shocks appear in the Phillips curve, the so-called divine coincidence […] does not hold, and it is not possible to achieve the global minimum of the loss function with just one policy instrument.
2023, Eric Sims, Jing Cynthia Wu, and Ji Zhang, The Four-Equation New Keynesian Model, The Review of Economics and Statistics 105(4), pp. 931--947
Forms